Local Indian cold rolled coil (CRC) trade prices have lost ground and remained at a discount to the even lower base prices announced by mills over the past week, and the positives of automobile majors reporting triple-digit growth in May sales failed to have any salutary impact on the market slowdown, SteelOrbis learned from trade and industry circles on Monday, June.
Indian benchmark 0.9 mm cold rolled coil (CRC) trade prices are down INR 2,800/mt ($36/mt) to INR 73,000/mt ($941/mt) ex-Mumbai and down INR 4,000/mt ($52/mt) to INR 72,700/mt ($937/mt ex-Chennai in the southern regional market.
The sources said that negative pressures of high inventories at re-rolling mills and trade channels remain so strong that the high growth in sales did not have any positive impact on the market. They said that, while May automobile sales were very robust, the market largely perceived this as a “monthly aberration” unlikely to be sustained in the face of surging inflation, the high cost of credit for consumers of passenger cars, and rising fuel costs. These negatives will continue to weigh down on raw material bookings by end-users.
“In a falling market, each end-use buyer is bargaining on prices. Large user industries are unwilling to enter into long-term supply contracts as prices are falling every week,” an official at a private integrated mill said.
“Every mill will now have to recalibrate the capacity utilization levels of captive re-rolling mills, adjusting to the skewed demand-supply dynamics. At the same time, there are limitations of economies of scale for reducing output from rerolling mills below a certain level. We are all grappling with these issues now,” he said.
$1 = INR 77.60
