Local Indian cold rolled coil (CRC) prices have gained INR 500/mt ($7/mt) during the past week to around INR 35,500/mt ($524/mt) ex-works, amid a mild resumption of restocking by dealers, traders said on Tuesday, January 19.
“It seemed that most market participants were successful in reducing their inventories in previous weeks. With higher price levels expected to be sustained, with no correction around the corner and with local mills holding base prices unchanged, dealers are returning to make bookings of small volumes, providing support for prices,” a Mumbai-based trader said.
“However, I am a bit confused over the market direction. Even after stock liquidations, CRC is still moving very slowly. Overall flat product prices are also showing divergent trends with prices of hot rolled coil (HRC) and CRC moving in opposite directions,” the trader said.
“I would maintain that too much government intervention in form of protection from imports is creating price distortions in the market. This is especially the case since such government interventions seem to be a kneejerk reaction to rising imports and the impact of protection on consuming industries is not thought through,” the trader said, adding that most market participants are unable to take a medium-term view on pricing or demand.
According to market sources, while the downside risk to CRC prices will be limited, volumes in the market will not improve as most dealers are facing limits on working capital availability and hence are limited in their ability to stock up high-priced CRC in any significant volumes.