Local Indian cold rolled coil (CRC) trade prices have indicated larger decline during the past week in reaction to the weak demand outlook, with key consuming industries like automotive and consumer durables hiking prices under inflationary pressures and depressing sales growth prospects, SteelOrbis learned from trade and industry circles on Monday, June 20.
Indian trade CRC prices have suffered extended losses compared to the previous week falling by INR 2,500/mt ($32/mt) to INR 69,600/mt ($886/mt) ex-Mumbai and down INR 2,000/mt ($26/mt) to INR 69,900/mt ($892/mt) ex-Chennai in the south.
According to trade circles, the weak demand outlook from user industries has been reflected in far fewer number of long-term contracts concluded by re-rolling mills since the start of the current fiscal year in April. It was pointed out that users are unwilling to lock in prices through long-term supply contracts, indicating expectations that declines could well extend over the next several quarters.
“Inflationary pressures are impacting every manufacturing sector. Automobile and consumer durable companies are all hiking prices and hence sales growth in the coming months will be muted. In such circumstances, derived demand for inputs like CRC will also remain weak and prices will remain under pressure,” a steel sector analyst with a Mumbai financial advisory firm said.
“Trade channels are still carrying higher-than-average inventories and, with working capital costs rising, are unwilling to restock,” he added.
$1 = INR 78.40
