Domestic zinc prices were mixed across the grades on Monday with scrap prices increasing slightly while zinc alloy ingots and secondary zinc ingot prices were down in line with LME zinc.
The official three-month LME zinc contract on Friday settled at $3,010/mt, down by $23/mt or by 0.76pc from a week ago. Base metals traded under pressure on a stronger dollar and COVID-19 resurgence raising demand concerns. Several market participants expect domestic zinc grades to slip in the coming weeks in line with the drop in LME, which limited ingot trades on Monday.
Demand for dross has picked up in both Delhi and Mumbai. Galvanizing orders have also started to improve, shared galvanizers in both the cities. The weekly Davis Index for zinc galvanizer’s dross in Delhi, Monday, settled at Rs196,500/mt ($2,647/mt) ex-works producer, flat from a week ago and the index for the same grade in Mumbai settled at Rs209,317/mt ex-works producer, up a marginal Rs67/mt.
Dross prices remained firm on Monday driven by increasing demand from oxide manufacturers and brass manufacturers. Galvanizers reported improvement in galvanizing orders which points out to good demand from the auto and construction sector. Receding monsoon in Mumbai has bolstered construction activities in the region. As markets are recovering post lockdown, end-user demand has picked up in various sectors, supporting scrap and ingots prices.
Markets have improved for dross in both Delhi and Mumbai in terms of spreads which narrowed from a week ago. Trades for dross have improved over the week and galvanizers remain optimistic of a further uptick in demand.
Ingots
The weekly Davis Index for secondary zinc ingot in Delhi settled at Rs202,650/mt ex-works Delhi consumer, down by Rs3,800/mt from a week ago in line with LME zinc levels despite meager demand. Similarly, the weekly index for secondary zinc ingot for Mumbai slipped by Rs4,333/mt to Rs205,650/mt ex-works consumer on Monday, driven by lower offers to entice new orders amid low demand from consumers.
Markets weakened for the grade in both Delhi and Mumbai in terms of spreads driven by low demand for the grade. Consumers continue to consume more primary zinc ingots over secondary zinc ingots.
The Davis Index for imported new zinc diecast, Monday, settled at $2,375/mt cfr India port, down by $8/mt from a week ago. Bids for the grade heard around $2,300/mt cfr India port and several buyers said offer levels are not workable in the current market conditions. Some offers were heard at around $2,400/mt on Monday.
The Davis Index for Zamak #3, Monday, settled at Rs257,000/mt del India consumer, down by Rs3,190/mt in line with a drop in primary zinc prices. The weekly index for Zamak #5 settled at Rs259,429/mt del India consumer, down by Rs3,561/mt from a week ago.
Demand for zinc alloys is on a steady rise but yet to pick pace both in the domestic as well as export markets. With construction and infrastructure activities gaining momentum, zinc alloy trades are likely to witness improvement. Demand from the auto sector has also started improving. Markets on Monday, however, weakened in terms of spreads, which narrowed amid limited demand.
($1=Rs74.2)