The Davis Index for galvanizer’s dross Monday increased by Rs1,583/mt ($21/mt) in Delhi to Rs152,200/mt ex-works producer from the prior week. Producers raised their offers amid LME gains despite low demand in the domestic market. The official three-month LME zinc contract rose by $44/mt on Friday and settled at $2,200.5/mt from the prior week. The LME contract is trending up since July 7 when it settled at $2,035/mt level gradually lifting domestic scrap prices.
Several galvanizers in Delhi and Mumbai raised offers by Rs2,000-3,000/mt leading to thin trades this week. In Mumbai, the weekly Davis Index for galvanizer’s dross rose by Rs1,083/mt to settle at Rs151,200/mt ex-works producer. Most oxide manufacturers have refused higher offers for dross as demand for oxide remains sluggish. Oxide makers opined that the market will take more than a month to return to pre-COVID levels. Few trades settled at index prices.
“We will need more than a week to have a salable stock of around 4-5mt, but downstream demand is uncertain, said Mumbai-based galvanizer”. The second phase of lockdown in Mumbai’s suburbs and cities like Pune have reduced orders for galvanization. Lockdown has led to negative sentiments, supply chain hindrances and cash flow crunches, rued galvanizers.
In Delhi, the market for dross has weakened as spreads for the scrap has widened from LME price levels by 1pc from the previous week. In Mumbai too, spreads have widened by a per cent, projecting weakness in the market. Domestic prices in India failed to climb relative to LME gains.
The weekly Davis Index for secondary zinc ingot on Monday rose by Rs5,000/mt and settled at Rs162,200/mt ex-works Mumbai consumer. Ingot prices also rose on the back of LME zinc prices. Consumers of secondary zinc ingot are likely to wait for prices to settle down amid low demand from end-users like brass manufacturers and galvanizers. The Davis Index for secondary zinc ingot in Delhi settled at Rs160,200/mt ex-works consumer, up by Rs4,000/mt on Monday from the prior week. Market participants believe that trades will take place despite higher prices as global cues are positive. Manufacturers cannot lower prices because LME zinc is trending up.
Markets for secondary zinc ingot strengthened over the week as spreads widened from LME price levels by a little over 2pc in both Mumbai and Delhi from the prior week. Domestic prices are still on the lower side said manufacturers who are contemplating to raise offers, if LME maintains the uptrend or holds onto this level.
New zinc diecast import rate was up in the week ending July 20 as global demand has improved. Volumes of US-origin imports rose during the week and prices increased in line with LME zinc. China has started consuming healthy amounts of zinc scrap, pushing prices upwards. Indian importers are bidding at around $1,700/mt but offers remained higher amid strong Chinese demand. The Davis Index for new zinc diecast Monday rose by $54/mt to $1,749/mt cfr India port from the week prior. Spread analysis showed that the market has weakened as spread tightened for the scrap grade by 1pc, while prices were up by 3pc.
Zinc alloy demand remained subdued but prices rose in line with raw material and LME prices. The Davis Index for Zamak #3 was up by Rs2,425/mt and settled at Rs193,400/mt del India consumer on Monday from the week prior.
Die-casters in southern and western parts of India are gradually ramping up production. Auto production resumptions have boosted demand for Zamak. Demand from the construction sector also drives demand for the zinc alloy, but a series of lockdowns have hampered construction activities amid a shortage of contract workers.
Markets for Zamak #3 remained unchanged as spreads were flat compared to the prior week. The market for Zamak #5 deteriorated over the week as spreads narrowed and came closer to LME prices by approximately 1pc from the prior week.