Local India cold rolled coil (CRC) prices have surged by INR 1,600/mt ($22/mt) week on week to INR 39,800/mt ($557/mt) ex-works in reaction to a hefty base price hike by domestic steel mills, traders said on Monday, December 9.
Most large domestic steel mills have increased base prices for delivery in the current month by a range of INR 15,00-17,00/mt ($21-24/mt) during the past week, which market intermediaries have said is a risky pricing strategy considering that a demand uptick among major consuming industries like automobile manufacturing during the recent festival season was elusive.
“Local steel mills have increased base prices for current-month deliveries largely based on expectations of a demand revival. But the point to be noted, for example, is that, while auto sales recovered slightly during the festival season of October, such gains did not last in November when sales were back on a decline, indicating that a prospective revival is still tenuous,” a Mumbai-based trader said.
“Clearly domestic steel mills are looking at maximizing per ton realizations rather than factoring in a demand recession. It is still to be seen how this pricing game plays out in the short term,” he added.
All major Indian automobile manufacturers are planning to significantly increase sales prices starting from January, while higher car prices would enable manufacturers to commence restocking, which in turn could enable the market to absorb higher CRC prices, but it is still too early to predict how this situation will develop, sources said.
Market analysts pointed out data released by the Automotive Components Manufacturers’ Association of India indicate that the aggregate turnover of all auto component producers had declined 10 percent in the first half of the current fiscal year, which is an indication that a major CRC consuming sector is still not out of the woods.
$1 = INR71.50