The revival in the local Indian cold rolled coil (CRC) market has proved short-lived with prices suffering major setbacks as active restocking fizzled out and given the resumption of import bookings at a deep discount to local trade prices.
The highest-ever May sales (dispatches from factory to dealers) reported by the passenger car segment failed to provide any support to the raw material market due to two primary concerns. Firstly, market intermediaries remained skeptical whether high dispatches from factories can be sustained in the face of inflationary pressures and the rising cost of finance faced by car buyers. Secondly, it is argued in trade circles that, even if key user industries can maintain their sales growth in the next quarter, raw material sourcing would increasingly be import-dependent as it is more cost-effective and amenable to just-in-time inventory management.
Sources said that benchmark 0.9 mm CRC trade prices have slumped by INR 2,600/mt ($32/mt) to INR 60,800/mt ($739/mt) ex-Mumbai and have lost INR 1,000/mt ($12/mt) to INR 59,850/mt ($727/mt) ex-Chennai in the south.
At the same time, South Korean passenger car makers in India had resumed import bookings instead of lifting their committed bookings with local re-rolling mills. According to these sources, the ex-South Korea CRC landed price is currently at a discount of 15-17 percent over local trade prices, while ex-China landed prices work out at a discount or around 12 percent.
“The demand side for both raw material and finished products will remain under pressure as we head into the usual lean monsoon months ahead. Rising cheap imports will further aggravate bearish conditions. Trade channels will continue to remain extremely cautious in restocking,” a Mumbai-based trader said.
“The base price trend for June is uncertain. Producers can either maintain or cut prices. Hence, market participants are on wait-and-watch,” he said.
$1 = INR 82.30
