Local Indian cold rolled coil (CRC) traded prices have continued to suffer setbacks with key user segments like the automobile industry announcing worse-than-expected production cuts amid component shortages, and reports that at least some long-term supply contracts have been opened up for renegotiation between buyers and standalone rolling mills, SteelOrbis has learned from trade and industry circles.
Traded prices for CRC for re-rolling have fallen to INR 74,500-75,000/mt ($1,014-1,020/mt) ex-Mumbai, down from INR 75,500-76,000/mt ($1,027-1,034/mt) ex-Mumbai a week ago for benchmark CRC gauge 0.9 mm.
Losses for thinner gauge CRC (0.2-0.35 mm) were sharper, with prices moving down INR 2,000/mt ($27/mt) to levels of INR 78,000-80,000/mt ($1,061-1,088/mt) ex-works.
Sources said that outlook and sentiments have worsened as major auto companies have announced worse-than-expected production cuts hit by the acute shortage of imported microchips and the distinct possibility that most passenger car makers will miss tapping into the usual festival season surge of demand in October-November and the resultant sharp fall in raw material bookings.
Largest domestic passenger car maker Maruti Suzuki India Limited (MSIL) said that its September output could be at least 60 percent lower. Mahindra & Mahindra has announced the possibility of 25-30 percent lower production this month. Others, Tata Motors, Volkswagen and Toyota, have also announced production cuts, in the range of 10-30 percent.
The automobile industry roughly accounts for 10-15 percent of total Indian steel demand.
Sources said that, in view of the new challenge in the key consuming sector, at least two to three auto majors are heard to have opened up renegotiations of their long-term supply contracts with standalone re-rolling mills. The sources said that, though contracted prices are not up for renegotiation, buyers are seeking a change of contract terms relating to quantities and delivery timelines, adjusted to auto companies’ cuts in output.
The changed supply contract terms would result in more volumes available in the market, a fall in fresh bookings, and supply-side pressures on traded CRC prices, the sources said.
$1 = INR 73.50
