The auto contracts for the first quarter (Apr-Jun ’21) seem to have been closed at last, after months of negotiations.
Earlier, while deals for mostly longs had been decided, now those for flats have also been sealed, SteelMint has learnt. A primary mill and a leading auto manufacturer have sealed the flats deals at INR 9,500/tonne (t) for cold rolled coils (CRCs) and INR 7,500/t for hot rolled coils (HRCs).
Earlier, the deals for longs had been closed between the same two parties at INR 5,950/t.
These deals vindicate an earlier report by SteelMint that the auto contracts for Q1 were likely to be closed by month-end (Jun).
Last week, a major two-wheeler manufacturer closed the deals in flats at INR 7,500/t for HRCs and INR 9,500-9,800/t for CRCs.
A month back, a leading two-and three-wheeler manufacturer had closed its longs contracts at around INR 6,900/t. However, the rates here had been slightly higher because these had been closed a bit earlier compared to the other players.
Vardhman Special Steels, which has Maruti Suzuki, Hyundai, General Motors and Bajaj Auto as some of its clients, had said that, “Price negotiations for the first quarter with our OEMs have been completed. The price increase is between INR 5,000- INR 6,000/t.”
Although the steel mills had sought a price increase of INR 10,000-11,000/tonne in their offers to the auto makers for Q1, these prices ultimately negotiated were lower.
This is because the auto sector has taken a hit from the lockdowns.
The Society of Indian Automobile Manufacturers (SIAM) recently said that since most part of May was under lockdown in many states, overall sales and production were both impacted.
“Many members had shut down their manufacturing plants to divert oxygen from industrial use for medical purposes. Since, both May 2020 and May 2021 were abnormal months because of the Covid-19 situation and lockdowns, comparison of these two months holds no meaning. However, a comparison of May 2021 sales with May 2019, which was a normal year, presents a realistic picture. So, as compared to May 2019, sales in the month of May ’21, for passenger vehicles stood at 88,045 units (- 61.2%), for two-wheelers at 352,717 units (-79.6%) and for three-wheelers, at just 1,251 units (- 97.6%),” a recent SIAM release said.
~ Madhumita Mookerji
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