Local India cold rolled coil (CRC) prices have continued to seek lower levels over the past week amid declining trade volumes, as large industrial users have become cautious about restocking, anticipating a demand depression from inflationary pressures in the economy, and with trade channels dropping prices to sustain sales.
Sources said that 0.9 mm CRC prices are down INR 200/mt ($2/mt) to INR 63,600/mt ($670/mt) ex-Mumbai and are down INR 400/mt ($4/mt) to INR 65,500/mt ($690/mt) ex-Chennai in the south.
Large industrial players have been preparing for a slowdown in sales growth amid higher energy costs and rising prices. Although automobile companies continued to report robust double-digit sales growth in April, manufacturers have remained cautious about their ability to sustain these growth rates. Several companies have announced price hikes for both commercial and passenger vehicles, driven by increased production costs, which could have a dampening effect on sales. As a result, they have been reducing raw material restocking.
At the same time, trade circles said that the market is expecting large mills to hike base prices in May, driven by rising costs of production, particularly energy costs, which would aggravate buyers’ resistance and cause a further fall in trade volumes.
“The market mood is very gloomy. The demand outlook is negative, prompting industrial users to slow down restocking. We hear standalone re-rollers are facing inventory pressures and are forced to drop prices to confirm bookings,” a Mumbai-based distributor told SteelOrbis.
“Rising costs and falling demand are a big negative cocktail going forward. We do not see any positive drivers on the horizon. At best, we can hope the market decline is gradual and not volatile,” he added.
$1 = INR 94.82
