Local Indian cold rolled coil (CRC) trade prices have surged in reaction to base price revisions announced by local mills amid apprehensions of a further slowdown in stock movements among market intermediaries and rolling mills, SteelOrbis learned from trade and industry circles on Monday, March 7.
The local benchmark 0.9 mm CRC trade price is up INR 1,800/mt ($25/mt) to INR 73,200/mt ($961/mt) ex-Mumbai and up INR 1,000/mt ($13/mt) to INR 72,300/mt ($949/mt) ex-Chennai in the south.
“The green shoots of revival in the auto industry, a key consuming sector, has been nipped in the bud by the invasion of Ukraine by Russia and sanctions against the latter,” a steel sector analyst with a Mumbai-based financial advisory firm said.
“Auto majors will face a further shortage of components and increased bookings and offtake of CRC can be ruled out in the short and medium terms. A lot of raw materials for micro-chips like palladium are sourced from Russia. This supply will dry up and prolong the shortage of chips being faced by the auto industry and derail plans for increasing March output,” he said.
At least two traders said that the negative fallout of higher prices in terms of a slowdown in stock movement and an inventory build-up would be borne by market intermediaries, as integrated mills could be expected to reduce utilization of their downstream rolling mills and focus on hot rolled coil (HRC) which is seeing strong export demand after Russia’s invasion of Ukraine.
On aggregate, the domestic automobile industry has reported an eight percent decline in February sales (dispatch from manufacturers to dealers) over the corresponding month of the previous year and unconfirmed reports from industry indicate that at least a few auto companies are considering production cutbacks for the few months ahead in the face of component shortages.
This is likely to trigger either booking cancellations or delivery deferments at standalone rolling mills, leading to excess stocks in the market, trade circles said.
$1 = INR 76.20
