Indian CRC supplies to improve as JSW Steel likely to resume operations at CRM mill

Indian steel giant - JSW Steel is likely to resume operations at its CRM-1 mill by the end of Jan'21, sources have reported SteelMint. This mill was under-maintenance for the last one year. The mill was a reversible type rolling mill and needs to be upgraded to a tandem cold rolling mill.

Thus the company has planned for its modification into PLCTM Line (pickling line coupled to tandem cold- mill) which provides better shape control, delivers significant improvements in mill productivity, yield, and production.

After the commencement, the capacity of the mill will be around 1.5 mn t which was 0.8 mn t earlier.

Going forward the company is planning to expand its galvanizing line in this unit having the capacity of around 0.4 mn t in which CRC will be easily available from the new CRM mill.

Impact post resumption of steel mill:
1.Spreads between HRC and CRC are expected to narrow- The gap between HRC and CRC has widened on supply constraints and improved demand. The current trade reference price of HRC is at INR 47000-49,500/t and CRC is at INR 56,000-57,000/t (exy-Mumbai). The gap is expected to reduce with easing supplies.

2.An increase in production may fulfill robust demand- An increase in CRC production will help to fulfill increased domestic demand amid increase bookings and active buying. Supply constraints amid reduced inventories resulted in a hike in CRC prices.

3.Robust demand in auto, white and yellow good sector-Increase demand of CRC from major automakers, yellow and white goods can easily be fulfilled on easing supply with the increased production of CRC

4.Downstream industries- Easing supplies of CRC will help downstream industries mainly to galvanizing and color coated industries to increase their production

JSW Steel increases CRC price by INR 2,000/t ($27) - Recently the company has raised its CRC prices by INR 2,000/t at the beginning of Dec'20 and is eyeing a second price hike in mid of the month on improved buying. The company is offering CRC (0.9 mm IS513 Gr) at around INR 56,150/t (exy-Mumbai). Prices do not include GST @18%.

Meanwhile in Nov'20 company raised CRC price twice by around INR 1,250/t at the beginning of the month and another hike of around INR 1,000-1,500/t in the mid of the month. Supply constraints resulted in a steep hike in CRC prices.

The company has installed a crude steel capacity of 18 mn t pa. It produced 16.06 mn t crude steel in FY'20 out of which flat steel production was 11.4 mn t.