Local Indian cold rolled coil (CRC) prices have lost ground as in a new trend large industrial users like automobile producers are shifting out of long-term supply agreements for raw material procurement and are preferring spot short-term purchases in face of challenges in demand, resulting in excess supplies floating in the market, SteelOrbis learned from trade and industry circles on Monday, April 24.
Indian benchmark 0.9 mm CRC prices are down INR 300/mt ($4/mt) to INR 64,200/mt ($781/mt) ex-Mumbai and have slipped by INR 200/mt ($2/mt) to INR 62,450/mt ($760/mt) ex-Chennai in the south, further widening the discount of trade prices over mills’ base prices.
“At a time when demand and sales growth forecasting has become extremely challenging for industries, the latter are unwilling to enter into long-term supply contracts entailing scheduled periodic off-takes including risks of charges involved in the case of failure to lift stocks from mills and carrying costs at their own factories. Spot-based procurement is more economical when the level of factory output is uncertain. This is having negative impact at the mills’ end,” a Mumbai-based distributor said.
“We do not see much downside risk from the current level. But there are no positives for any upward movement either. Need-based purchases will dominate the market, with scattered discounting depending on the pressures of each trading firm,” he said.
$1 = INR 82.20
