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

Indian domestic zinc prices for major grades increased on improved demand in the week ending July 27. Prices rose in the range of Rs300-800/mt for dross and secondary zinc ingots in Mumbai and Delhi. The official three-month LME zinc contract rose by a marginal $1.5/mt and settled at $2,202/mt on Friday from the week prior. Domestic markets for zinc grades improved in the week according to spread analysis. 


Galvanizers dross

The Davis Index for galvanizer’s dross in Mumbai gained Rs600/mt ($8/mt) and settled at Rs151,800/mt ex-works producer on Monday up from the prior week. Mumbai’s galvanizers are on track to reach normal levels of dross inventories (pre-pandemic). Some companies received healthy levels of bookings for galvanization this week as infrastructure and construction projects resumed amid a revival in affordable housing sales. 


In Delhi, the Davis Index for galvanizers’ dross rose by Rs467/mt to Rs152,667/mt ex-works producer as trades concluded on a positive note. Demand was healthy with more traders from the Delhi region booking stock with the galvanizers than oxide makers. The paint industry is also gaining momentum and demand for zinc oxide is likely to improve in the near term. Real estate sector, especially, housing sales uptick is expected to boost demand for downstream industries including galvanizers and oxide manufacturers. As the tyre industry struggles to make sales, many oxide manufacturers will depend on the paint sector, which is the second largest consumer of zinc oxide in India. 


The market for dross in Delhi and Mumbai strengthened as spreads tightened from the LME compared to the prior week spreads. This shows that market has improved with demand progression raising prices. Spreads for dross tightened by roughly 1pc in the major cities. 


Secondary Zinc Ingots

The weekly Davis Index for secondary zinc ingot rose by Rs800/mt to Rs163,000/mt ex-works Mumbai consumer from the prior Monday. Secondary zinc consumers are planning to stock inventories ahead of peak monsoon season as logistics services get hampered due to heavy rains. Monsoon has caused flooding in some parts of Mumbai, which could push prices up temporarily due to demand-pull inflation. Spread analysis shows that markets for secondary zinc ingots have improved as spreads expanded by approximately 1pc in both Mumbai and Delhi. Domestic prices rose, while LME remained flat over the week. 


Zinc diecast

New Zinc die-cast prices remained rose by $1/mt to settle at $1,750/mt cfr India port from the week prior. Domestic demand has improved compared to the prior weeks, said importers. Suppliers of new zinc diecast are spoilt for choice as China buyers are bidding higher than Indian importers. Chinese government’s boost for infra projects is driving demand for zinc products in the country. 


Zinc Alloy

Prices of zinc alloy, Zamak #3 and Zamak #5 increased slightly over the week on the back of healthy bookings. The weekly index for Zamak #3 settled at Rs193,462/mt del India consumer, up by Rs62/mt while the index for Zamak #5 rose by Rs385/mt and settled at Rs196,385/mt del India consumer. 


Zamak consumption depends highly on diecasters. Zamak #3 and #5 trades solidified this week with a slight improvement in infra projects. Die-casters received healthy orders from end-users including the auto sector. Auto sales are likely to turn positive in the coming months. July sales are, however, predicted to be well below prior year levels, but improve from June. Demand from the rural segment is pushing auto sales, which will in turn push demand for zinc and aluminium alloys. Die-casters who cater to the retail segment for the production of zips are also experiencing slight growth in demand from end-users. 


Markets for Zamak #3 and Zamak #5 strengthened as spreads widened slightly from LME compared to the prior week. Primary zinc prices remained flat at approximately Rs191,400/mt, shadowing the LME zinc official contract which also settled flat at $2,202/mt on Friday from the prior week.


Industry bodies in India have suggested to the Reserve Bank of India and the government to include huge public investment stimulus to expedite the infrastructure projects worth Rs100crore. The request could reflect in the monetary policy expected to be out in August session which could boost demand for construction material such as steel, galvanized structures and zinc alloys.



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