The local Indian cold rolled coil (CRC) market has continued on its downward trend for the second consecutive week, losing INR 500/mt ($7/mt) week on week to INR 37,100/mt ($523/mt) ex-works in reaction to the less-than-anticipated revival in automobile sales during the festival season and the anticipation of November base price adjustments by domestic steel mills, traders said on Monday, October 28.
While passenger car sales did pick up during the ongoing festival season, the uptick in sales has not been sufficiently strong to prompt automobile manufacturers to increase capacity utilization of their production lines and increase restocking of raw materials like CRC.
“There has been some revival in auto sales over the festival days. But this revival has to be sustained over at least one quarter to have any impact on the overall performance of the auto industry or the reversal of their no-production days every month,” a Mumbai-based trader said.
“Auto sales had declined 22.4 percent in September 2019 compared to the corresponding month of the previous year. The decline in October sales will be less but is still not expected to reach the positive zone and this will not prompt the industry to increase production and hence raw material offtake,” the trader added.
Market sources said that the premium of CRC prices over local HRC prices is at an all-time low and a large number of domestic steel mills are lowering their production of CRC as there are no high-volume buyers and are instead attempting to manage inventories by pushing higher volumes of HRC to overseas markets.
$1 = INR 70,94