Over the past week, prices in the local Indian cold rolled coil (CRC) market have remained unchanged for the second consecutive week at INR 49,000/mt ($689/mt) ex-works, even though trading activity has fallen sharply with market intermediaries reducing fresh bookings to nominal volumes in reaction to the slowdown in industrial growth, traders said on Tuesday, January 15.
“Sentiment in the market has been affected by government data which showed that industrial growth in November 2018 was the slowest in 17 months. With end-users expected to reduce restocking of key raw materials, market intermediaries are also staying away from making fresh bookings and building inventories,” a Mumbai-based trader said.
“The national elections about to be announced in the next few months and the political uncertainties until the election results are out are also taking their toll on the market and dealers are unwilling to lock in cash in new stocks; also because of the current fiscal year drawing to a close and dealers want to keep cash in hand,” the trader added.
According to two other traders, given the low market appetite, domestic steel mills are not taking any steps to trigger fresh buying by adjusting base prices even though the mills are facing rising inventories themselves and the market is caught in a bind of low demand and high prices.
The traders said that some dealers in the western Indian market are reported to be pushing volumes offering discounts of around INR 500/mt, and, though these were still just stray reports in the market, discounting could spread across regional markets if trading activity continues to dip as dealers would be keen to liquidate existing stocks to bolster cash on their books by the close of the current fiscal year.
$1 = INR 71.09