Local Indian cold rolled coil (CRC) prices have inched up across markets over the past week amid the slowdown seen in mill-to-market movement of stocks and some positive indications emerging from the commencement of long-term supply agreements between producers and large industrial buyers.
Sources said that benchmark 0.9 mm CRC prices are quoted in the range of INR 53,500-56,200/mt ($613-644/mt) compared to the range of INR 52,600-56,000/mt ($642/mt), with ex-Chennai prices being reported at the higher end of the range at around INR 56,200/mt ($644/mt) owing to a sharp drawdown in local stockyards, while distributors must meet deliveries from neighboring states.
Several in trade circles said that large industrial users like automobile companies have started long-term supply negotiations with large standalone re-rollers for the April-June quarter. They said that the tentative indications trickling out of talks were on the positive side and both buyers and sellers were tending to agree on a “good” increase in base prices, i.e., the floor of the average trade price of the past one month. Besides, it was pointed out that, if such a clause is finalized in a long-term supply agreement, it will offer some “protection” to sellers preventing the average price of the past month from nose diving.
“The slowdown in arrival of material in the market and the resumption of long-term supply agreements led to a better mood. But there are still many variables. The supply-side tightening will be short-lived. Long-term supply agreements are a challenge and can go in either direction. Large automobile companies are facing muted sales growth and will continue to be cautious in raw material bookings. All these elements will offer a strong headwind to prices,” a source at a private mill told SteelOrbis.
$1 = INR 87.20