Local Indian cold rolled coil (CRC) prices have remained stable during the past week at INR 44,000/mt ($703/mt) ex-works amid reduced import transactions even though transaction volumes in the local market continued to be at low levels, traders said, March 10.
According to a Mumbai-based trader, CRC stocks of dealers have continued to move slowly but the number of transactions for imported ex-China CRC has fallen sharply during the past week, providing some support for local prices.
"The Indian rupee has weakened steadily to around INR 62.54 to a dollar. At the same time, Chinese exporters have increased their CRC offers by $10-15/mt on CFR basis and most offers have been rejected by Indian traders," the trader added.
Market sources said that, despite the easing of import competition, upside potential has been restricted by dealers' unwillingness to conclude fresh deals.
Most dealers are negative in their outlook following dismal "core sector" growth in January this year, as revealed by government data.
The core sector, comprising natural gas, cement, steel, fertilizer, coal and electricity generation, indicated growth of just 1.8 percent year on year in January this year, down from 2.4 percent and 6.7 percent respectively in the preceding months of December and November 2014.
Sources said that expectations of a demand revival have failed to materialize and CRC prices are holding up only for technical reasons such as the weakening of the rupee, and there exists a significant downside risk for the medium term.
According to market expectations, a downward movement in CRC prices would be triggered by the inevitable downward price adjustments by local steel mills, possibly in early April, the sources added.