Contrary to the overall bearish flat steel market conditions, local Indian cold rolled coil (CRC) prices have surged over the past week, riding on apprehensions of severe constraints on availability, following disruptions of production at the plant of POSCO Maharashtra Steel Limited due to protests, SteelOrbis has learned from trade and industry circles on Monday, March 15.
Sources said that, while base prices have remained unchanged at INR 58,500-59,000/mt ($805-812/mt) ex-works after base price cuts early in the month, tradable prices have surged to INR 61,000-62,000/mt ($839-853/mt) ex-Mumbai in bookings.
Sources said that, even at higher prices, a large number of automobile plants have been unable to source any material over the past week, as the POSCO Maharashtra plant, supplier to almost every major domestic passenger car manufacturer, has been unable to make dispatches as workers and local politicians have blockaded entry and exit from its plant.
According to the Society of Indian Automobile Manufacturers (SIAM), over 80 percent of car manufacturing capacity has come to a near standstill owing to raw material shortage in the wake of disruptions at POSCO Maharashtra.
The market estimates that about one month’s equivalent of production or about 20,000-30,000 mt of auto grade CRC has been pulled out of the market due to the impact of the protests at POSCO Maharashtra and that no other integrated steel mills would be able to replace this volume of supplies to the market in the short term, leading to a surge in prices and a lack of availability even at higher prices.
The worst hit have been auto manufacturers with six-month long-term supply contracts under which they keep minimum CRC inventories and rely on just-in-time entry of raw materials into their auto plants, which have come to a halt for the past several days.
There was almost no material available on spot basis as market intermediaries have been giving preference to their long-term existing customers at new premium levels.
$1 = INR 72.70