Offers for zinc scrap grades rose in the week ending Monday driven by a sharp climb in LME zinc contract. Prices rose for the second consecutive week on the back of LME. The official three-month LME zinc contract rose by $56.5/mt in the week that ended on Friday. It has risen sharply in last five sessions which resulted in domestic scrap offers to rise though demand is still on the lower-end. Markets weakened in terms of spreads over the week amid laggard demand.
The weekly Davis Index for zinc galvanizer’s dross in Delhi on Monday rose by Rs2,000/mt ($27.55/mt) and settled at Rs200,117/mt ex-works producer drive by higher offers. Also, primary zinc prices moved up, resulting in dross prices to move further.
The weekly Davis Index for zinc galvanizer’s dross in Mumbai rose by Rs3,525/mt to Rs196,725/mt ex-works producer on the back of higher offers in line with LME’s sharp climb over the week.
The weekly Davis Index for secondary zinc ingot in Delhi rose by Rs917/mt to Rs203,200/mt ex-works consumer and the index for Mumbai settled at Rs202,450/mt ex-works consumer, up by Rs2,818/mt.
Mumbai prices have jumped higher as construction activities have come to a complete halt and steel galvanizing has reduced, leading to slight shortage of dross which supported prices. Also, offers were increased in line with LME. Demand, however, is still subdued but with lockdown relaxation, it might revive. Delhi government has allowed construction and manufacturing industries to resume work from June 1, which might gradually translate into higher trades.
New zinc diecast import prices on Monday were heard between $2,300-2,400 levels cfr India port. Offers varied in the market depending on different regions. No concrete deals for the grade were heard on Monday. Mumbai traders shared that demand for imported new zinc has fallen by 15-20pc from a month ago. Offers for the grade are up in line with LME but demand in India continues to be low.
Zinc alloy
Zinc alloy prices moved up in line with rise in primary zinc and LME levels. Primary zinc is up almost by Rs3,000/mt from a week ago. Zinc official contract increased by 2pc in the same period. Offers for Zamak #3 was heard at Rs254,000-255,000/mt del India consumer on Monday.
The weekly index for Zamak #3 and Zamak#5 increased by Rs2,400/mt each to settled at Rs253,725/mt and Rs256,725/mt del India consumer, respectively.
Demand for zinc alloys remains low with construction and automobile sector temporarily down amid the lockdown. Several auto manufacturing companies are, however, resuming production slowly which might increase demand for auto diecast parts.
Demand is expected to be low in the coming weeks as most states in India have extended lockdown or restrictions. Die casters are focusing on exports as demand in India remains weak.
Markets for most zinc grades weakened in terms of spreads on Monday owing to subdued demand. Challenges related to supply chain, labourers, liquidity and production cuts amid the lockdown still exists. For markets to improve, strong impetus is required, particularly from the construction sector. Monsoons is predicted to be normal, which means construction activities would continue to be slow even if lockdown is lifted.
($1=Rs72.55)