Local Indian cold rolled coil (CRC) prices have remained stable but amid minimal trade activity and the continuing bearish outlook, with leading consumers like the automobile industry restocking at very low levels during the sluggish sales growth of the rainy season.
Sources said that 0.9 mm benchmark CRC prices are stable at INR 57,000/mt ($657/mt) ex-Mumbai and are unchanged at INR 60,900/mt ($702/mt) ex-Chennai in the south.
According to the sources, the stability of prices “was misleading” as it was in the midst of almost negligible trade activity. Buyers have been unwilling to commit bookings owing to the weak demand outlook while distributors have been unwilling to adjust the price to push sales leading to a logjam in the market.
It was pointed out that the declining sales growth seen by automobile manufacturers in May is likely to be further accentuated in June and July, the peak monsoon season, and this will keep companies to minimal stocking of raw materials.
Hence, most market participants have not ruled out CRC prices entering a new downcycle in the absence of demand and rising inventories across market intermediaries and mills.
“Our assessment is that CRC prices have a downside potential of around INR 1,000/mt ($12/mt) from the current level in the short term, that is in July-September quarter, during which most end-use industries will post poor sales growth,” a Mumbai-based distributor said.
“Extended credit terms being offered to push even small-volume sales will result in tighter liquidity among market intermediaries and will hamstring fresh restocking,” he added.
$1 = INR 86.71
