Local Indian cold rolled coil (CRC) prices have continued falling for the second consecutive week although the pace of the decline has slowed down with prices edging lower by INR 600/mt ($8/mt) week on week to INR 39,400/mt ($547/mt) ex-works. Market sentiment has weakened further in response to reports that a government fiscal stimulus will not be forthcoming, traders said on Monday, August 26.
“The government indications have been made clear. It will not be offering any fiscal stimulus to bolster manufacturing sector growth. A fiscal stimulus in the form of a cut in tax rates on automobiles is not forthcoming either and distress faced by manufacturers is unlikely to ease even in the medium term,” a Mumbai-based trader said.
“Under these circumstances, CRC off-take by end users is at an all-time low as no manufacturer is willing to lock up funds in inventories when finished product sales are in a tailspin. Dealers are also resorting to discounts to frantically lower inventories and release cash flow,” the trader added.
Market sources said that, even with local CRC prices falling by INR 2,100/mt ($29/mt) over the past fortnight, a larger number of dealers in the northern and western regional markets are offering discounts in the range of INR 500-1000/mt ($7-14/mt), indicating a panic to liquidate higher-priced stocks and increase cash flows.
$1 = INR 72.02