Change of heart:
Slowdown in export markets, global recessionary pressures steer the shift
Indian mills have agreed to a reduction of ₹4,900/tonne in HRCs
and ₹4,200/tonne in CRCs’ prices in Q3 contracts, show data | Photo Credit: BABU
Some Indian steel mills have reportedly cut prices for auto-grade
offerings by ₹4,000-5,000 per tonne for October-December contracts, in view of
higher available stocks and weakening commodity cycle. Automakers have already
announced price hikes January onwards.
Mills and original equipment makers (OEMs) had agreed to
switchover to quarterly contracts since April this year in view of higher
commodity price volatility. Previously, auto contracts were reviewed and
negotiated once every six months.
According to data collated by Steelmint, Indian mills have agreed
to a reduction of ₹4,900/tonne in hot rolled coils (HRCs) and ₹4,200/tonne in
cold rolled coils (CRCs) prices in Q3 FY23 auto contracts. Auto segment
accounts for 9-10 per cent of India’s steel consumption.
As per trade sources, price hikes in Q1 FY23 – when quarterly
contracts came into force – was in the range of ₹4,000-6,000 per tonne across
CRC and HRCs. However, in Q2, when the metal cycle was weakening, mills went in
for cuts of approximately ₹10,000 per tonne (across both HRC and CRCs).
For
the long-term
Trade sources told businessline,
Indian mills are looking at liquidating stock and also cater to customers like
automobile makers, focusing on the long term. A slowdown in export markets and
global recessionary pressures have made mills look into the domestic markets.