Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Zinc prices fell across grades due to lack of demand and fall in LME zinc. The official LME three-month zinc contract fell by $47/mt and settled at $2,672.5/mt on Friday from the previous week. Markets for all grades strengthened in terms of spreads this week compared to prior Monday. 


The weekly Davis Index for zinc galvanizer’s dross on Monday in Delhi settled at Rs189,283/mt ($2,594/mt) ex-works producer, down by Rs2,050/mt on slow trades. Galvanizing units had to reduce offers amid marginally weaker demand for dross last week. A fall in LME also led to a fall in primary zinc prices which is the raw material for galvanizers. This drop, coupled with low demand for comparatively high priced dross, resulted in offers being reduced on Monday. The weekly Index for zinc galvanizer’s dross in Mumbai settled at Rs188,000/mt ex-works producer, sliding by Rs2,250/mt. 


A drop in steel prices recently could lead to stronger demand for zinc galvanization. Galvanizing units are not receiving healthy orders as consumption of steel is suffering amid very high prices. Markets may take a turn now that semi-finished steel prices are inching down. Markets for zinc dross in Delhi and Mumbai strengthened as spreads contracted for the grade while indexes fell. The spread for Delhi’s index contracted by 1.23pc while that of Mumbai contracted by 1.11pc from the previous week.


The weekly index for new zinc diecast settled at $2,300/mt cfr India port, up by $23/mt. Prices are rising on global cues and not due to demand in India per se.  Contrary to LME levels, new zinc diecast index rose by almost 1.01pc from the prior week. The market for new zinc diecast strengthened with spreads for the index narrowing by over 2pc from a week ago.


In Delhi, the weekly index for secondary zinc ingot fell by Rs1,583/mt to Rs192,500/mt ex-works consumer on Monday – down for the second straight week due to lowered offers amid a fall in LME levels. Market for secondary zinc ingot in Delhi strengthened as spreads widened by 1.50pc on Monday compared to a week ago. Prices dipped in Delhi on the back of higher scrap prices and lower trades from brass manufacturers in India. The weekly index for secondary zinc ingot in Mumbai settled at Rs189,000/mt ex-works consumer, down by Rs1,000/mt as market strengthened with spreads for the index widening by 1.75pc. 


The weekly Davis Index for Zamak #3 settled at Rs230,500/mt del India consumer, down by Rs1,050/mt. Prices dipped for zinc alloys in line with raw material prices, i.e primary zinc. The weekly index for Zamak #5 fell by Rs1,025/mt to Rs233,500/mt del India consumer. Markets for Zamak #3 and Zamak #5 strengthened as spreads for the indexes widened from the week prior by almost 2.2pc. 


Demand for zinc was marginally low last week due to the high prices of scrap, the basic material for several industries like oxide makers and brass manufacturers. High prices are squeezing margins of these downstream producers who are avoiding new orders and settling on inventories until scrap prices become favourable. Market participants await clearer price directions for this week. 


Prices of primary zinc fell in synch with LME by approximately Rs6,000/mt to around Rs215,000-225,000/mt del India from last Monday. Demand for zinc is pressured by a prolonged lull in infrastructural activities which may change after the Union Budget for FY22 is presented. 


($1 = Rs 72.96)

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