Local Indian cold rolled coil (CRC) prices have declined slightly over the past week amid a combination of buyers’ resistance to recent base price increases by mills, large industrial users reducing restocking volumes ahead of the fiscal year-end and the tight liquidity faced by market intermediaries.
Sources said that benchmark 0.9 mm CRC prices have declined by INR 500/mt ($6/mt) to INR 54,500/mt ($600/mt) ex-Mumbai but have remained stable at INR 58,700/mt ($651/mt) ex-Chennai in the south.
According to the sources, the recent series of base price increases by mills has strained the market, triggering a correction, with buyers still active but reducing volume bookings, unwilling to carry high-priced raw materials. At the same time, with the fiscal year-end approaching on March 31, users are unwilling to lock up cash in inventories of raw materials and are adopting just-in-time management of raw materials.
At the distribution level, trade channels are also reducing restocking of raw materials as several market intermediaries have exhausted working capital limits from banks and will wait for new credit lines to kick in after the new fiscal year starts on April 1.
“Demand in key user industries remain on the weaker side and hence the market is not in a position to absorb repeated price hikes by producers. The holidays ahead are also contributing to slower movement of stocks in the market,” a Mumbai-based distributor told SteelOrbis.
“We expect prices to move in a narrow range in the absence of strong positive drivers. The national budget to be presented before the parliament next month may offer some macro-economic direction,” he added.
$1 = INR 90.50