Local Indian cold rolled coil (CRC) prices have stable amid the negative outlook stemming from the weak sales growth forecast from key user industries and unconfirmed reports of a few large consuming sectors calling off long-term supply agreements with local re-rolling mills and instead they expected to shift to imports for cautious restocking, SteelOrbis learned from trade and industry circles on Monday, April 17.
Indian benchmark 0.9 mm CRC prices have remained unchanged at INR 64,500/mt ($785/mt) ex-Mumbai and are stable at INR 62,650/mt ($762/mt) ex-Chennai in the south.
The key industries like automobile and consumer durables had aggressively increased prices of their products and this was expected to dampen down the sales growth seen over the past few months. At the same time, fears of poor rainfall in the coming months impacting agriculture creates a risk of a fall in rural income and demand, forcing industries to be extremely cautious in restocking raw materials, as already reflected in the slowdown in stock movement in trade channels.
Sentiments have taken a significant hit from unconfirmed reports that at least two South Korean-headquartered domestic passenger car manufacturers have called off long-term supply agreements with two of the largest re-rolling mills, failing to agree on new pricing. It is learned from trade circles that, since demand for raw material will be low in the current quarter, the two auto companies are shifting to imports to meet their requirements in the short term.
“Local producers have been too aggressive in increasing base prices over the past two months. This is proving to be counter-productive in the absence of a demand uptick and the market is resisting now,” a Mumbai-based distributor said.
“There is a liquidity shortage in trade channels. The cost of bank finance is too high for traders to make fresh bookings and maintain stocks when movement from mill to market is very slow. Only very large dealers are active in the market. Most others are focused on liquidating old stocks and ensuring a positive cash flow,” he said.
$1 = INR 82.20
