The local Indian cold rolled coil (CRC) market has lapsed deeper into a correction phase with prices recording major losses amid a fall in new bookings, re-rollers failing to conclude long-term supply agreements and the bearish outlook in user industries, and the imminent hike in base prices by mills failing to trigger restocking, SteelOrbis learned from trade and industry circles on Monday, February 20.
Benchmark 0.9mm CRC trade prices have slumped by INR 1,300/mt ($16/mt) to INR 64,000/mt ($723/mt) ex-Mumbai and are down INR 1,000/mt ($12/mt) to INR 62,850/mt ($759/mt) ex-Chennai in the south.
The mood in key user industries like automobiles and consumer durables has been becoming negative as sustaining health growth in sales will become increasingly challenging in the face of rising costs and the higher cost of financing faced by consumers, and hence manufacturers are expected to become extremely cautious in restocking raw materials.
At the same time, despite the end of the fiscal year approaching, no re-rolling mill has reported any successful conclusion of long-term supply agreements with their buyers for the April-June quarter amid reports of sharp differences over price escalation clauses.
“Though unconfirmed there is a lot of talk in the market that large industrial buyers are deliberately dragging their feet in concluding long-term supply agreements on higher prices over existing agreements. Buyers are unwilling to get locked into supply agreements and are inclined to keep import options open at a time when the international finished steel market appears to have peaked for the short and medium term and prices may be cooling,” a Mumbai-based distributor said.
“The market is expected to continue to be volatile and no one in the market is willing to take a long-term position in maintaining stock levels. Minimal just-in-time raw material inventory management is key to most of the user industry,” he said.
$1 = INR 82.80
