Local Indian mills have cut cold rolled coil (CRC) July base prices, but trade prices have continued to remain depressed amid the negative outlook for fresh bookings by key large industrial users.
Sources said that some large mills have reduced trade prices of benchmark 0.9 mm CRC by around INR 300-550/mt ($4-7/mt) to the range of INR 60,000-60,500/mt ($719-725/mt) ex-works. The mood in the market is extremely gloomy amid a lot of negative reports coming from key industrial users. For example, the automobile industry reported passenger car inventories at dealers to be at a historical high of 67 days. It is heard that an estimated $7.22 billion worth of passenger car inventories are lying unsold at the dealers’ end.
With the industry carrying such high volumes of inventory, this results in a locking up of capital across the entire production chain and a very big negative for raw material bookings in this critical user industry.
“At one end, there are excess supplies. CRC output of mills increased to 0.4 million mt in June, from 0.3 million mt in May. On the other hand, demand is weakening as evident from the slowdown in the auto sector and re-rollers are reporting defaults by consumers to lift stocks under long-term supply agreements,” a Mumbai-based distributor told SteelOrbis.
“With the monsoon setting in across the country, demand will be at its lowest for the year and at best we can hope for prices to remain range-bound,” he added.
