Most domestic zinc scrap and ingot prices were higher on Monday compared to the previous week, prompted by a depreciation of the Indian rupee against the US dollar and a rise in LME zinc prices. Rising COVID-19 cases have dampened the market sentiments which could weigh down prices in the coming days, said market participants. Delhi and Mumbai markets have weakened in terms of spreads for all grades compared to the previous week.
Indian currency dropped to below Rs75.05 against the dollar on Monday driven by a spike in COVID-19 cases and a rise in crude oil prices. On Monday last week, the domestic currency was around Rs73 against a dollar. A fall in the rupee results in lower imports and shifts buyer’s focus to domestic products. This is the primary cause why manufacturers and sellers have raised their offers on Monday compared to the prior week. Another factor that supported the rise in prices is the improvement in LME zinc prices. The official three-month LME zinc contract on Friday settled at $2,827/mt, up $46/mt or by 1.67pc from the previous week.
Zinc galvanizers dross
The Davis Index for zinc galvanizer’s dross on Monday settled at Rs193,350/mt (2,580/mt) ex-works Delhi producer, up by Rs2,850/mt from the prior week on higher offers as primary zinc prices rose by almost Rs2,000/mt from the prior week. Demand was weak on Monday and may fall further owing to lockdown and curfew imposed to curb the spread of the virus. Markets for the grade weakened with spreads widening by 1.60pc from the prior week.
The Davis Index for zinc galvanizer’s dross for Mumbai settled at Rs187,117/mt ex-works producer, up Rs1,367/mt from prior week. The price rise was less acute in Mumbai as Maharashtra is most hit by the pandemic and several migrant workers are rushing back home slowing production and demand. Markets for the grade weakened in term of spreads which widened by 2.70pc for the price index from the prior week.
Secondary zinc ingot
In Mumbai, the weekly Davis Index for secondary zinc ingot, Monday, settled at Rs195,500/mt ex-works consumer, up Rs2,417/mt. Offers were raised on Monday despite lower demand from brass manufacturers. Markets weakened in terms of spreads which contracted for the price index by 2.34pc from the prior week.
The index for secondary zinc ingot for Delhi settled at Rs200,500/mt ex-works consumer, up by Rs3,500/mt from the prior Monday. Markets weakened in terms of spreads contracting by 1.90pc from the prior week for the price index. There is price uncertainty in the markets, some sellers want to sell off inventories and are offering higher quantities at discount, said market participants.
Offers on Monday were wide-ranging across both Mumbai and Delhi. Secondary zinc ingot offers in Delhi ranged from Rs200,000-203,000/mt ex-works consumer. Towards the end of the day, low demand led to deals concluding at the lower end.
The Davis Index for new zinc diecast, Monday, settled at $2,325/mt cfr India port, down by $132/mt. Trades slowed amid the declining rupee and cautious attitude of buyers. End-user consumption will most likely be hurt with the announcement of a lockdown. Keeping this in mind, importers are playing it safe for April shipments.
Overseas sellers complained of low availability of scrap, claiming the shortage may support higher prices. On the contrary, buyers in Indian shared low demand will pressure prices with some believing prices are expected to fall by another $100/mt in the coming days. The market for the grade weakened as spreads widened by 6.12pc from the prior week.
The Davis Index for Zamak #3 on Monday settled at Rs243,810/mt del India consumer, up by Rs6,110/mt from the prior week driven by the dollar rising and LME lifting primary zinc prices too. Demand may be low but manufacturers could not reduce prices, said producers based in North India. The Davis Index for Zamak #5 on Monday settled at Rs246,810/mt del India consumer, up by Rs6,610/mt from a week ago. Diecasters are receiving fewer orders owing to lower demand from the infrastructure and auto sectors. Some small scale diecasters shut shop in the absence of orders while most have cut back procurement of Zamak and other alloys.