Zinc scrap market improved over the week ending Aug 17 as prices for scrap and ingots rose from the prior week by approximately 2-4pc in the domestic region while LME fell by 2pc on Friday from the previous week. Spreads narrowed for scrap and widened for ingots, indicating strength in the market. Market participants believe that demand will improve gradually in the next couple of weeks.
The official three-month LME zinc fell by $30.5/mt on Friday and settled at $2,379.5/mt from the week prior. With a dip in LME zinc, markets for zinc have improved as scrap and ingots prices rose over the week.
Secondary zinc ingot
The Davis Index for secondary zinc ingot in Delhi on Monday rose by Rs6,750/mt ($90/mt) and settled at Rs167,950/mt ex-works consumer from the week prior on improved demand from brass manufacturers in Uttar Pradesh and Delhi. Brass makers are ramping up production apparently and prices of brass scrap have also increased by approximately Rs3,000/mt, said traders on high demand.
In Mumbai, the Davis Index for secondary zinc ingots rose by Rs3,300/mt to Rs163,500/mt ex-works consumer from the prior week. Traders said that demand is expected to rise this week which resulted in manufacturers raising offers. The market for secondary zinc ingot in both Delhi and Mumbai strengthened on the back of price rise and a fall in LME zinc. Spreads widened by 4pc and 3pc in Delhi and Mumbai, respectively, from the previous week compared to LME zinc levels.
The Davis Index for galvanizer’s dross in Delhi rose by Rs56/mt and settled at Rs155,556/mt ex-works producer on Monday from the previous week. Galvanizing orders were slow leading to lower supply of dross with several galvanizers. With end-user demand picking up, manufacturers are raising price offers in the domestic market which supported index prices. The Davis Index for galvanizer’s dross on Monday in Mumbai rose by Rs3,300/mt and settled at Rs163,500/mt ex-works producer from the week prior with improved demand from central and west zone India.
Zinc oxide demand continued to improve with tyre industry witnessing substantial demand from auto manufacturers that are ramping up production to meet pent up festive demand. Paint industry is also ramping up production despite supply chain disruptions. This will support prices of dross in the domestic market in the coming days. The market for dross in Mumbai and in Delhi strengthened as prices gained while LME fell in the same period. Spreads narrowed and came closer to LME levels by 1-2pc in Delhi and Mumbai from the preceding week.
New zinc diecast import
The Davis Index for new zinc diecast remained flat to up at $1,802/mt cfr India port, up $6/mt from the previous week with slow import movement in line with the demand from Indian galvanizers and secondary ingot makers. The market for new zinc diecast strengthened in India as spreads narrowed for the scrap by a little over 1pc from the week prior despite import prices remaining flat. Several market participants are focusing on buying local scrap which has lowered bids for new zinc diecast imports which could push prices down. Minuscule trades were heard over the week keeping the index flat from the week prior.
With the auto sector’s focus on light weight auto bodies, the market for zinc alloy is quite disturbed as many auto manufacturers have slashed orders for zinc diecast parts and are substituting it with aluminium parts. Demand from infrastructure is, however, strong and diecasters that manufacturer bathroom fittings or household related items are ramping up production to catch up with the loss in construction days during the lockdown period.
Demand for different alloy grades are climbing, said zinc alloy manufacturer in the north. Prices of raw material is also up. Special high grade on August 13 was around Rs205,200-206,200/mt in India which is raising prices of Zamak #3 and Zamak #5 amongst other zinc alloys. Prices of zamak are still in check with LME copper trading on the lower side while aluminium and zinc are on the higher side.
The Davis Index for Zamak #3 rose by Rs2,517/mt on Monday to Rs206,350/mt del India consumer with good demand from diecasters all over India and the index for Zamak #5 also rose by Rs2,933/mt to Rs209,350/mt del India consumer from the week prior. The market for zinc alloys also strengthened with spreads widening by 3pc each for Zamak #3 and Zamak #5 from the previous week. Several diecasters informed that diecasting orders are increasing gradually but are however still lower than expectations.