The local Indian flat steel market has reflected vastly divergent trends, with local cold rolled coil (CRC) traded prices remaining stagnant, even as hot rolled coil (HRC) prices have hit a historical peak, showing weakness in end-use demand from automobile manufacturing and likely possibilities of mills tweaking product portfolios, SteelOrbis learned from trade and industry circles on Monday, October 25.
Traded CRC prices have remained unchanged at INR 75,600-76,600/mt ($1009-1023/mt) ex-Mumbai (0.9 mm thickness) as the expected rise in bookings from automobile manufacturers for the rise in festive season production has failed to materialize over the current month.
Automobile companies have not been able to ramp up production to meet the festive season surge in demand amid the prolonged microchip shortage, and hence they have been continuing to remain cautious as regards concluding fresh bookings for CRC, the sources said.
However, most significantly, with local HRC prices touching a historical high of INR 73,000-74,000/mt ($975-988/mt), the spread with CRC prices has narrowed a lot and so there is a proportionate disincentive for higher value addition to the former product. In fact, officials at producing companies said that mills are reassessing their product portfolios, with it being a possibility that re-rolling mills’ outputs would be adjusted to limit captive conversion to CRC and enable higher commercial sales volumes of HRC.
Prices are moving up on the back of a cost push and producers are seeking to pass on higher energy costs, which is easier in the case of high demand for HRC and ‘challenging’ in the case of relative low end-use demand for CRC.
$1 = INR 74.90