Local Indian CRC prices stable despite weak demand from main consuming sectors, negative outlook

Monday, 12 August 2019 09:56:24 (GMT+3)   |   Kolkata

The seven week-long downtrend in the local Indian cold rolled coil (CRC) market was replaced by a stable trend in the past week, with prices moving sideways at INR 41,500/mt ($585/mt) ex-works as domestic steel mills decided to keep August delivery prices unchanged, though the market has continued to be characterized by bearish sentiment, traders said on Monday, August 12.

“However, CRC price stability is elusive. The pain in the automobile sector is percolating across industry segments including component sectors and these are providing extremely bearish indicators for CRC demand and prices,” a Mumbai-based trader said.

“It is the same story of slowdown in other major CRC consuming industries too. Some segments of the consumer durable product markets have seen a 20 percent fall in sales over the past six months. So the moot question is where is demand support for CRC going to come from,” the trader commented.

Market sources that western and northern Indian dealers have reportedly been offering discounts ranging around 10 percent to liquidate stocks and lower carrying costs and have refrained from any fresh bookings.

Another trader quoted a statement from the Automobile Component Manufacturers’ Association (ACMA) which said that the sector was anticipating cuts of one million jobs and commensurate output cuts and in such a case it is inevitable that raw material off-take is also going in for a further fall.

The trader said that auto sales during in July this year had slumped by 40 percent with the largest manufacturer Maruti Suzuki suffering a 36 percent fall in sales and has reportedly cut jobs of around 50,000 contract workers. Almost every auto manufacturer has closed down production lines or has gone in for weekly production stoppages and naturally this has lowered fresh raw material bookings and will continue to put pressure on CRC prices despite the relative stability seen during the past week, the trader added.

$1= INR 71.03

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