The downtrend in local Indian cold rolled coil (CRC) trade prices has been aggravated by fears of oversupply following the imposition of export tax by the government at a time when demand from key user industries like automotive continues to remain low, SteelOrbis learned from trade and industry circles on Monday, May 23.
Indian trade prices of benchmark 0.9 mm CRC are down INR 2,000/mt ($26/m) to INR 77,500/mt ($1,000/mt) ex-Mumbai and down INR 1,000/mt ($13/mt) to INR 78,700/mt ($105/mt) ex-Chennai in the south.
“Trade prices have a very strong negative bias in the short and long terms. But forecasting a bottom is a challenge. There is going to be a lot of oversupply in the local market as export allocations get diverted for local sales after the imposition of export tax,” a Mumbai-based steel distributor said.
“But further downside risks are difficult to anticipate. Will lower prices spur demand? We do not think so as sales of key user industries like automotive remain negative and are facing headwinds of rising inflation and surging fuel prices. At the same time, mills are already talking of cuts in output from rolling mills to check supply-side pressures on price,” he said.
At least two market participants have said that dealers have already started deferring any fresh bookings, with mills anticipating a base price reduction of at least INR 2,000/mt ($26/mt) in June under pressures of inventories of unsold export allocations.
$1 = INR 77.50
