Local Indian cold rolled coil (CRC) prices have slumped by INR 800/mt ($11/mt) week on week to INR 41,000/mt ($544/mt) ex-works, reacting to excess supplies as large integrated steel mills started to increase plant capacity utilization rates and conversion CRC output, SteelOrbis was informed on Monday, May 18.
However, according to traders, even though rolling mills’ output was being increased in anticipation of end-user industries like automobile manufacturers resuming production, bookings and off-take have continued to remain at very low levels and there was no support for the excess CRC available in the market.
After zero April sales, the auto industry, a key CRC consumer, was disappointed that the economic revival package announced by the government did not have any specific bailout provision for the industry and, in absence of sales, merely resuming assembly lines would only increase losses for companies and would not translate into any raw material bookings of significant volumes, markets sources said.
The sources said that, even after the fall in prices, at least three to four integrated steel mills have been offering discounts of 2-5 percent on ex-works prices to sustain higher utilization levels of rolling mills.
It has been pointed out that around 60 percent of domestic automobile manufacturing is concentrated around the National Capital Region (NCR) around New Delhi, Tamil Nadu, Karnataka and Maharashtra, all of which are regions with a high incidence of Covid-19 cases and relaxations of lockdown restrictions are limited, and hence manufacturing units are unsure of the seamless movement of raw materials and thus have been cautious about making fresh bookings despite phased resumptions of their assembly lines. Sources said that most automobile manufacturers are not operating at more than 20-30 percent of their capacities.
$1 = INR 75.40
