Local Indian cold rolled coil (CRC) prices have continued to consolidate at higher levels gaining INR 700/mt ($10/mt) week on week to INR 40,500/mt ($572/mt) ex-works amid expectations of further base price hikes by domestic steel mills and hopes of a recovery among end-use industries, while inventories are lower after major mills reduced production, SteelOrbis learned on Monday, December 16.
According to traders, large steel mills can be expected to increase base prices consistently between now and the end of the current fiscal year on March 31, 2020, triggering an improved trade environment and restocking by market intermediaries.
Most large steel mills are starting to push up prices expecting the worse to be over among end-user industries. Even though overall Indian automobile sales declined by 20 percent in November and passenger car sales were down 21 percent, total production of passenger vehicles during the month was four percent higher than in the corresponding month of the previous year, indicating that manufacturers were expecting a reversal round the corner and this could trigger fresh restocking of raw materials like CRC, traders said.
“Several large mills over the past quarter have been able to lower inventories by lowering production and supply-demand dynamics are more balanced than earlier in the year. This will enable the steel mills to aggressively push base price hikes over the next three months, improve per ton margins and bolster their bottom line at the time of closing accounts on March 31, 2020,” a Mumbai-based trader said.
$1 = INR 70.80