Zinc scrap, ingot and alloy prices rose by 4-6pc on Monday after Diwali break compared to Nov 12, last pricing date. High LME zinc levels, demand and supply dynamics and exchange rates supported the price rise. Spread analysis indicated a strengthening market compared to pre-Diwali for all grades in Delhi and Mumbai.
The official three-month LME zinc rose by $145/mt and settled at $2,789/mt on Monday from Nov 11 levels. Primary zinc ingot prices also rose mirroring gains in LME zinc. Primary was hovering around Rs230,000-236,000/mt on Monday, up Rs12,000/mt from Nov 12.
Zinc dross
Zinc dross prices have recorded a new high in 2020 in both Mumbai and Delhi. The Davis Index for zinc galvanizer’s dross on Monday Mumbai settled at Rs175,483/mt ($2,366/mt) ex-works producer, up by Rs8,666/mt from 11 days ago. Offers were raised on the back of higher primary zinc ingot prices and demand improvement. Some oxide manufacturers are however bidding at around Rs170,000/mt del Mumbai as prices moved up steeply. Prices of zinc ingot rose by Rs12,600/mt to Rs236,600/mt on Monday from Nov 12.
The Davis Index for zinc galvanizer’s dross in Delhi Monday settled higher by Rs9,609/mt to Rs181,880/mt ex-works producer from Nov 12. Offers were raised in Delhi too. Some traders said there is shortage of material in the city due to production halts during Diwali.
Market for zinc dross in both Mumbai and Delhi strengthened in terms of spreads. The index for Mumbai dross jumped by 5.19pc and spreads narrowed by 0.41pc from Nov 12. Similarly, the index for Delhi rose by 5.58pc and the spreads contracted by 0.75pc. LME is up 5.34pc in the last 11 days.
Secondary zinc ingot
Consumers of secondary zinc ingot, brass manufacturers were left flabbergasted on Monday as prices of secondary zinc ingot rose sharply. The Davis Index for secondary zinc ingot Delhi Monday settled at Rs186,167/mt ex-works consumer, up by Rs11,967/mt in a period of 11 days. There is a strong demand for secondary zinc ingot said traders of Delhi region. Some brass manufacturers are bidding at Rs180,000/mt ex-works consumer, but no deal reported. Some trades were heard at and around the index price. Post Diwali break, a sudden boost in demand for brass finished goods was also reported by market participants.
The Davis Index for secondary zinc ingot in Mumbai Monday settled at Rs180,450/mt ex-works consumer, up by Rs10,883/mt from 11 days prior on the back of high LME levels and expected demand from consumers. Pent-up demand will impact the market in the coming weeks, said market participants.
Spreads for secondary zinc ingot widened, depicting a strengthened market in both Mumbai and Delhi. The Delhi index rose by 6.81pc and the spread widened by 1.79pc from Nov 12. The index for Mumbai’s secondary zinc ingot rose by 6.42pc while the spreads expanded by 1.42pc from Nov 12.
Zinc alloys
The Davis Index for Zamak #3 on Monday settled at Rs236,025/mt del India consumer, up by Rs10,692/mt from Nov 12. Manufacturers have had to raise offers on the back of higher SHG (Special High Grade) zinc prices, the basic raw material for the alloy. Similarly, the Davis Index for Zamak #5 also increased by Rs10,692/mt on Monday and settled at Rs239,025/mt del India consumer compared to Nov 12.
Demand for Zamak is mostly from the auto and construction sectors. The festive season fared well for the auto sector and infrastructure is slowly gaining momentum. This renews belief that demand for zinc alloy will remain robust in the coming months. Several market participants feel that pent-up demand is not yet over and it has the potential to support prices in the near future.
The market for Zamak #3 and Zamak #5 strengthened in terms of spread for the indexes as they widened slightly from Nov 12. The index for Zamak #3 rose by 4.74pc and for Zamak #5 by 4.68pc from 11 days prior levels.
The Davis Index for new zinc diecast settled at $2,002/mt cfr India port, up by $107/mt on Monday from Nov 12. Demand for new zinc diecast will grow further as the production of secondary zinc ingot is expanding in India.
A looming uncertainty regarding a renewed lockdown remains a major concern for the Mumbai market. As COVID-19 cases are rising, the state government is contemplating another potential lockdown. Delhi and Ahmedabad are other cities that are experiencing high cases of COVID-19.
($1=Rs74.16)