Local Indian cold rolled coil (CRC) prices have continued to seek lower levels amid reports of some large industrial users cancelling bookings with re-rollers as they adjust output levels to match the slowdown in sales, resulting in a rise in inventories at producers and distributors, SteelOrbis learned from trade and industry circles on Monday, December 16.
Sources said that benchmark 0.9 mm CRC prices are down INR 200/mt ($2/mt) to INR 53,500/mt ($631/mt) ex-Mumbai and have also lost INR 200/mt ($2/mt) to INR 54,800/mt ($646/mt) ex-Chennai in the south.
There were reports that one southern India-based large automobile manufacturer cancelled a booking for an estimated 25,000 mt with a re-roller after deciding to lower its own output in the January-March quarter of the fiscal year. This was followed by another western India-based specialized packaging company cancelling a booking for 30,000 mt, citing poor demand for its products and lower production levels in the coming months.
Sources said that these reports aggravated the extremely bearish sentiments in the market and some distributors are pushing discounted sales at INR 52,000/mt ($613/mt) in the southern regional market, lower than the discounted price of INR 53,200/mt ($627/mt) a week ago.
“Major industrial users are reconciling their output levels for the last quarter at lower levels and lowering raw material restocking in tandem. With sales growth expected to slow down further in the next three months, drastic measures like cancelling bookings are fast becoming imperative, resulting in inventories rising at both producers and distributors,” a Mumbai-based trader said.
“We expect CRC trade prices to continue to face risks with the next target bottom of INR 51,000/mt a distinct possibility before the current fiscal end on March 31,” he said.
$1 = INR 84.80