Local Indian cold rolled coil (CRC) prices have slumped sharply during the past week, declining by INR 2,000/mt to INR 51,000/mt ($741/mt) ex-works, amid reports of overproduction and high inventory build-ups at steel mills, catching market participants by surprise, traders said on Tuesday, July 10.
“The pace and size of the fall in CRC prices has taken the market by surprise. The sudden sharp downtrend is largely owing to apprehensions of overproduction by steel mills and higher-than-expected inventories,” a Mumbai-based trader said.
“The trend in the weakening of CRC prices is more surprising as it is completely divergent from the trends seen in other flat product categories like hot rolled coil (HRC) where prices and sentiments continue to be strong,” the trader added.
According to two other traders, the fact that most steel mills have decided to maintain their CRC base prices unchanged for the current month is seen by the market as producers losing some of their pricing leverage due to inventory build-ups.
“Mills' inventories finding a balance and a recovery of prices may be possible in the short term since there is no import competition from inward shipments of CRC in view of the steady weakening of the rupee against the dollar,” the two traders averred.
$1 = INR 68.80