Local Indian cold rolled coil (CRC) prices have continued to record major gains for the sixth consecutive week moving up INR 850/mt ($12/mt) week on week to INR 42,350/mt ($591/mt) on expectations of a base price hike by domestic steel mills and revived restocking by key end-users, SteelOrbis was informed on Monday, January 6.
According to traders, most large steel mills will revise base prices over the next few weeks and the increase is expected to be around INR 1,000/mt ($14/mt), triggering a rush to conclude fresh bookings by both market intermediaries and end-users.
Market sources said that, even though automobile sales growth in 2019 hit a two-decade low, most large passenger car manufacturers have been planning to increase production and cut down on monthly ‘no production days’, which would lead to an uptick in fresh bookings of key raw materials like CRC in the coming months and offer support to the sustained price rise seen over the past several weeks.
“A lot of the sustainability of current prices will depend on government spending that is likely to be unveiled in the national budget next month,” a Mumbai-based trader said.
“Domestic steel mills’ pricing power will also improve. There is virtually no import competition in the CRC segment. Pricing and margins of steel mills will also get on a firmer base, considering that all large steel mills have adjusted production levels and are now better aligned to demand, and this will help inventory management and attempts to push up prices on lower supply-side pressures,” he added.