Local Indian cold rolled coil (CRC) prices have gained ground for the eighth consecutive week moving up INR 500/mt ($7/mt) week on week to INR 43,250/mt ($608/mt) ex-works in anticipation of base price increases by domestic steel mills over the next few weeks and increased demand from new automobile producers planning entry into the country, SteelOrbis was informed on Monday, January 20.
Market sources said that local steel mills are planning to increase base prices by at least INR 1,000/mt ($14/mt) over the next few weeks, expecting the worst to be over for automobile sales which hit a 20-year low in 2019.
The sources said that a revival in demand for CRC is expected with automobile manufacturers gradually bringing production lines back into operation even though sales continue to remain sluggish.
The sources said that there is an expectation among local steel mills of incremental CRC demand from new global auto companies planning their India strategy despite falling sales of existing companies.
They point out to the fact that Hyundai affiliate, Kia Motors, which entered the Indian market last year, is expected to step up its aggressive plans in the current year, as MG, also known as Morris Garage, steps up the introduction of more products into the country. Chinese auto companies like Great Wall Motors, FAW Haima Motors and Changan Automobiles are also firming up their India plans and these new auto manufacturing plants would trigger incremental CRC demand in the current year.
“On the supply side, domestic steel mills have been able to get back some pricing power by pushing higher volumes of HRC overseas and lowering CRC production to bring a better demand-supply balance in line with consumption growth. Large steel mills expect domestic CRC consumption to stabilize at around seven percent during 2020, enabling higher prices to be sustained, unlike in the previous year,” a steel sector analyst with a Mumbai-based financial advisory firm said.
$1 = INR 71.10