Zinc scrap prices in India rose by 2-5pc from the prior week as domestic demand improved and LME zinc levels increased. The official three-month LME zinc contract settled at $3,033/mt, up by $72/mt from a week ago. The contract gained sharply on Thursday and Friday as market sentiment improved, driven by the $1 trillion infrastructure bill tabled by the US government.
Domestic zinc scrap grades rose on Monday from a week ago, driven by the jump in LME levels and the gradual improvement in demand from the various consumer segments which are on the mend as markets recover from the second wave of COVID-19. Operational capacities are on the rise in line with demand. Export markets for zinc alloy ingots are also expected to recover, shared zinc alloy manufacturers.
Markets in Delhi and Mumbai witnessed healthy trades of zinc dross on Monday. The weekly Davis Index for zinc galvanizer’s dross in Delhi settled at Rs196,500/mt ($2,642.91/mt) ex-works producer, up by Rs2,700/mt driven by higher offers in a recovering market. These offers were met with ready demand from oxide manufacturers and brass manufacturers in the city.
Markets in Delhi weakened in terms of spreads as traders remained under pressure to settle at low rates due to fear of losing deals in a recovering market.
Spread analysis shows, dross prices could further increase in line with gains in LME. The Davis Index for Mumbai’s zinc galvanizer’s dross settled at Rs209,250/mt ex-works producer, up by Rs 4,250/mt driven by material shortage amid ongoing monsoons, as supply chain remains affected, shared some participants. Demand is on a gradual increase following markets in Delhi.
The Davis Index for secondary zinc ingot for Delhi settled at Rs206,450/mt ex-works consumer, up by Rs8,960/mt driven by a jump in LME levels and a slight improvement in trades in Delhi. Buying activities have slightly improved owing to strong demand from pipe galvanizers in the North. The Davis Index for Mumbai’s secondary zinc ingot settled at Rs209,250/mt ex-works consumer, up by Rs5,166/mt from a week ago as demand from galvanizers inched up. A majority of galvanizers, however, continue to use primary zinc ingots.
Markets for secondary zinc ingot improved in both Delhi and Mumbai as traded volumes grew and sentiment remains bullish. An expected increase in zinc demand in the coming months driven by the government’s thrust on infrastructural growth is supporting the market. This stable demand outlook bodes well for galvanizers, which in turn could increase demand for secondary and primary zinc ingots. But with increased galvanization, dross production would increase, pressurizing dross prices if supply exceeds demand in the coming weeks.
The Davis Index for imported new zinc diecast settled at $2,365/mt cfr India port, up by $46/mt due to the rise in LME levels. The hike in imported zinc diecast led to higher secondary ingot prices in India.
The Davis Index for Zamak #3 on Monday settled at Rs260,190/mt del India consumer, up by Rs5,582/mt from the prior week as primary zinc prices were boosted by the jump in LME zinc prices. Demand for Zamak from various consumer segments remained slightly low but is increasing gradually, especially from auto parts diecasters. Demand from infrastructure-related sectors remained low. The Davis Index for Zamak #5 settled at Rs262,990/mt del India consumer up by Rs5,715/mt. Imports of Zamak declined as domestic demand slowed. As a result, operating capacity utilization remained under 90pc, shared market participants.
Markets for zinc alloys weakened over the week as prices failed to rise in line with the LME zinc levels. Several die casters in the South continue to limit procurements to immediate melt requirements. They are awaiting demand recovery from the auto and infrastructure sectors amid a margin squeeze due to high alloy prices.