Local Indian cold rolled coil (CRC) prices have moved into a clear downtrend over the past week, amid disappointing sales growth in user industries led by automobiles and the slowdown in restocking by industrial users, SteelOrbis learned from trade and industry circles on Monday, October 13.
Sources said that the benchmark 0.9 mm CRC price has lost INR 300/mt ($3/mt) to INR 53,700/mt ($605/mt) ex-Mumbai and has fallen by INR 2,000/mt ($23/mt) to INR 56,000/mt ($632/mt) ex-Chennai in the south amid reports of defaults by few large buyers in lifting already-booked volumes.
Notably, the automobile industry has reported a below-expected festival season demand uptick, resulting in only moderate sales growth in the past month, and hence was continuing its cautious approach to restocking raw material, negatively affecting CRC prices.
There were unconfirmed reports that at least one standalone western India-based re-roller had commenced renegotiations with a large buyer on a long-term agreement after the latter sought adjustments to accommodate the lifting of lower volumes than stipulated in the supply contract. This, the sources said, aggravated the mood in the market, indicating oversupply and weak demand, although neither the buyer nor the seller confirmed such re-negotiation of the long-term supply contract.
“Clearly demand revival has been below expectation. Not only the automobile sector, but even consumer durable manufacturers are reporting tepid festival season sales and hence resorting to need-based raw material restocking,” a Mumbai-based distributor told SteelOrbis.
“We foresee prices will seek a new bottom with a downside risk of another INR 1,000/mt ($11/mt) in the short and medium term. This will be through discounting by mills and trade channels,” he added.
$1 = INR 88.67