As India continues to be under lockdown, a few sectors have been permitted to resume activity at reduced levels. But these relaxations have failed to bring respite to the zinc market. Mining has resumed on a reduced scale and only essential activities are being carried out.
In absence of demand as well as supply, the Davis Index for secondary zinc ingots settled at Rs159,700/mt ($2,084/mt) ex-works Mumbai consumer and Rs159,950/mt ex-works Delhi consumer, Monday, flat from the week prior. Smelters in Mumbai continue to remain shut and are uncertain when markets could re-open as the city grapples to control the surging cases. Even before the initial lockdown announcement, demand from end-use consumers was weak. Due to the economic effect of the extension, markets could take a while to recover.
Producers are distressed to sell their piled-up inventories. Thus the demand for scrap is unlikely to revive immediately after markets reopen. Faced with glaring challenges like unavailability of daily wage workers and a halt in cash flow, manufacturing activity could take time to stabilise.
Demand in the auto sector, a major consumer of zinc remains impacted. Once the sector revives, it could boost zinc markets. The weekly Davis Index for galvanizer’s dross settled flat at Rs146,325/mt ($1,920/mt) ex-works Mumbai producer and Rs150,783/mt ex-works Delhi producer, flat from the week prior as no trades were reported. The tyre industry, the biggest consumer of zinc oxide also holds excess finished product at hand. This will affect the demand for zinc oxide and in turn for zinc dross. Prices for galvanisers’ dross are, therefore, likely to be under pressure when markets re-open.
The Davis Index for new zinc diecast settled at $1,456/mt cfr India port, flat on Monday from the week prior. Importers stayed away from placing orders as they await for markets to restart. Consignments are stuck at ports with no labour to unload and deliver to manufacturer warehouses.
The three-month official LME zinc contract rose by $48/mt and settled at 1,946/mt on Friday from $1,898/mt in the week prior. Primary zinc manufacturers may raise prices when markets re-open in line with LME zinc.
The Davis Index for Zamak #3 settled flat at Rs170,533/mt del India consumer and the index for Zamak #5 settled at Rs174,033/mt del India consumer, also unchanged from the week prior.
No Zamak trades were recorded as both producers and consumers remain shut for operations. In India, some small and medium-sized enterprises have resumed operations to sustain.
Market participants are now relying on government aid and subsidies to help them tide over the crisis.
($1 = Rs76.63)