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

The revival of demand from tyre manufacturers is expected to spike up zinc dross demand by 10pc in June compared to May in Western India, said a key oxide manufacturer to Davis Index. Galvanizers in the region still await ramp-up of industrial activities post lockdown 4.0.


Tyre manufacturers are steadfast on the road to recovery after being shut for more than two months amid the COVID-19 lockdown. Major tyre companies have restarted production across India and are expected to ramp up production in the first quarter.


Oxide demand from the tyre sector was down by more than 50pc at the beginning of March due to sluggish auto sector. In late March and April, demand for tyres fell drastically in the absence of direct sales to automakers amid temporary suspension of auto production. The output of tyre companies dropped by 50pc in March, bringing down Q4 (Jan-March) volumes by 20pc. In April, 90pc volumes were impacted and in May, 50-60pc decline. 


Across India, galvanizers were shut and dross production was halted during the lockdown. Demand from tyre industry was just 20pc in May compared to the previous year and in June bookings from tyre companies are expected to rise to 30pc. Even the small uptick in demand is a major positive in a lull market. Production is likely to increase in June as bookings look better than May, said zinc oxide manufacturers, expecting a gradual increase in demand. 


JK Tyre, Ceat Tyres, Apollo Tyres, MRF, Bridgestone, Goodyear have resumed production, but most companies are yet to reach full production capacity. 


The paint industry is next to tyre industry in consumption of zinc oxide. As real estate construction was idled during the lockdown, the paint sector is expected to witness a U-shaped growth curve post-lockdown, which could drive demand for zinc dross. Several paint manufacturers have resumed operations including major companies Asian Paints and Kansai Nerolac.


Galvanizers are offering prices between Rs145,000-155,000/mt in the west zone where COVID-19 cases are lower, said a trader. Mumbai is still ‘out-cold’ in terms of new trades as the city suffers from a rising number of virus cases. Prices are fluctuating more than normal levels across the country. 


A major oxide producer in the east said that galvanizers were offering dross at around Rs138,000/mt, which is quite close to pre-pandemic levels but offers failed to meet bids. Manufacturers are not ready to pay Rs138,000/mt as lockdown has caused heavy losses and they strive to reduce input costs. There is quite a mystery in the market regarding dross prices but one thing is for sure that demand will improve once tyre sales take-off. 

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