Local Indian cold rolled coil (CRC) prices have remained stable during the past week at INR 41,800/mt ($557/mt) ex-works due to almost zero fresh bookings amid signals that major automobile and consumer durable manufacturers will not restart plant operations immediately as the national lockdown has been extended until May 17 but with further relaxations in restrictions, SteelOrbis has learned on Monday, May 4.
Most automobile and consumer durable goods manufacturers are unlikely to immediately resume manufacturing. Such companies have already been carrying large inventories and they are unlikely to restock raw materials including CRC. As a result, this will prolong market inactivity, while local steel mills have also brought their conversion to CRC down to almost negligible levels.
Domestic automobile manufacturers are on average carrying inventories equivalent to one month of production and unofficial figures indicate that passenger car makers have suffered almost zero sales during the April lockdown.
“There is no possibility of increasing plant utilization rates [for crude steel] higher than the current levels of less than 50 percent,” a manager at a private steel company said.
“Not only because of no demand for flat steel products, the current price levels do not offer any attractive margins from sales of high auto grade steel. So it’s a better strategy to focus on semis and HRC, pushing them overseas, at least to maintain positive cash flows,” he added.
$1 = INR 75.00
