Local Indian cold rolled coil (CRC) prices have continued to decline for the fourth consecutive week, losing INR 500/mt ($7/mt) week on week to INR 42,200/mt ($554/mt) ex-works, coupled with widespread discounting, as pessimism mounts that end-user industries like automotive and consumer durables will not be able to make a fast recovery even post partial or full phasing out of the lockdown next week, SteelOrbis has learned on Monday, April 6.
According to traders, several large integrated steel mills have been offering additional discounts ranging around INR 500/mt ($7/mt), but these have also failed to trigger any fresh bookings.
Even if restrictions of the movement of people and trade are lifted next week, major consuming industries, which had shut down since last month like automobile manufacturing and consumer durables, will not be able to bring back production in the short term as there is just no demand and hence new bookings for CRC are unlikely to surface, sources said.
“We are operating our plants, even at lower capacities. But major user industries are not. So where do we sell? Our estimate is that it will take two quarters for user industries to bring their capacities to optimal levels. Hence, demand for CRC will continue to remain at the lowest level till then, irrespective of how the current lockdown is phased out,” a manager of an eastern India-based steel mill said.
“Discounting to manage inventories is not an effective tool as the market is not a function solely of demand. There are too many uncertainties both locally as well as in global trade which are impacting our operations and how things will unfold is not clear. So prices can only continue to slide,” he added.
$1 = INR 76.20
