Local Indian cold rolled coil (CRC) prices have remained stable during the past week at close to INR 46,000/mt ($626/mt) ex-works, but downside risks have increased and sentiment has reversed to negative amid reports of the government being unwilling to offer a tax benefit to support the domestic auto industry.
With reports trickling in that the government has turned down an auto industry plea for a reduction in the Goods and Service Tax (GST) from the current level of 28 percent, a cloud has been cast over the user industry which was banking on lower taxes to support the revival of passenger car sales during the festival months of October and November.
The mood in the market has worsened with expectations that the domestic auto industry will now slow down increases in output from their assembly lines in the absence of tax cuts to bolster sales, and this has been reflected in a slowdown in fresh bookings from integrated steel mills, the traders added.
“The divergent demand profile, positive in the case of hot rolled coil (HRC) and negative for CRC, is a pricing challenge. Prices for HRC have significant headroom for hikes considering strong local demand. This will necessitate matching upward adjustments to CRC prices to maintain spreads even at the risk of a slowdown of stock movement in the case of CRC,” an official at ArcelorMittal Nippon Steel Limited told SteelOrbis.
$1 = INR 73.45
