Local Indian cold rolled coil (CRC) prices have shown signs of softening over the past week, with the government reform of indirect taxes having a minimal impact on the market mood and leading users reporting high levels of inventory of finished goods, resulting in cautious restocking of raw materials.
Sources said that benchmark 0.9 mm CRC prices have edged down by INR 300/mt ($3/mt) to INR 55,300/mt ($627/mt) ex-Mumbai and have lost INR 500/mt ($6/mt) to INR 59,000/mt ($669/mt) ex-Chennai in the south.
The sources said that the reforms on the indirect tax regime - the Goods and Service Tax (GST) - will result in lower incidence of tax on key user sectors like small cars and consumer durables. However, this has had a limited impact on the raw material segment and no improvement in the mood because it will not lead to immediate incremental demand as both car and consumer durable manufacturers are carrying large inventories of finished products. The inventory will be sufficient to meet any rise in demand during the festival season ahead and hence the continued cautious restocking of CRC by users, the sources added.
“The positive is that discounted sales from re-rollers have stopped. The negative is excess supply and a demand improvement below expectations. Hence, on balance, prices will remain range-bound in the short term,” a Mumbai-based distributor told SteelOrbis.
$1 = INR 88.15