This week trade reference prices of CRC (IS 513, Gr O, 0.9mm) have witnessed a sharp fall by around INR 1,500-1,700/t in a few major markets. SteelMint’s benchmark price assessments of 0.9 mm, IS 513 Gr O cold-rolled coils (CRCs) dropped by around INR 1,000/t to INR 78,000-79,000/t exy-Mumbai as compared to INR 79,000-80,000/t seen a week ago. The prices mentioned above are exclusive of GST @18%.
Domestic CRC prices remain under pressure due following factors-
1. High inventories of CRC- The steel manufacturers had diverted more hot rolled coils (HRC) to downstream production of cold-rolled coils (CRC) in anticipation of improved demand in the second half (H2) of CY’20. Major automobile manufacturers and white goods manufacturers had posted good sales results as the need for personal mobility and work from home trend gained preference due to Covid concerns. Thus, increased inventories of CRCs resulted in prices coming under pressure.
2. Limited buying- The Indian automotive industry is still reeling under the effects of the second wave of the pandemic which has impacted sales and production. Hero MotoCorp’s sales fell 3% in Jul’21, led by a decline in sales of the motorcycle segment. Bajaj Auto’s two-wheeler sales increased by a meagre 0.3% to 156,232 units in Jul’21. Also, dull demand and higher CRC prices resulted in sluggish trade in the market.
3. Gap between CRC and HRC prices reduces- The gap between the domestic CRC and HRC market prices has significantly come down by around INR 5,500/t compared to the peak seen in mid-Jun’21. For the current week, the gap stands at INR 11,100/t contrasted against INR 16,600/t in mid-Jun’21.
4. Fall in CRC export offers- Export offers for CRC have come down to $1,220-1,230/t FoB India, falling by $100/t m-o-m as against $1,320-1,330/t FoB at the beginning of Jul’21. Fewer trades were concluded to the European Union at higher offers. However, later on, due to limited trades, mills have slashed CRC offers.
On the other hand, domestic HRC prices have remained range-bound due to sluggish trade. SteelMint’s benchmark price assessments of 2.5-8 mm IS 2062 hot-rolled coils (HRC) stood around INR 67,000-67,500/t (exy-Mumbai) as compared to INR 66,500-67,500/t seen a week ago. The prices mentioned above are exclusive of GST @18%.
Near-term outlook
Domestic CRC trade prices may witness a further decline in the near term due to poor buying in the trade market. Demand supply mismatch will keep the CRC market bearish. Meanwhile, SteelMint feels the price disparity between HRCs and CRCs may reduce further on limited trade.
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