Indexes for zinc scrap and ingot fell on Monday from a week ago driven by lowered offers triggered by a sharp dip in LME levels. Prices rose in the last two weeks but dipped between Rs800-5,500/mt on Monday from a week ago. Demand is likely to improve in the coming weeks with the easing of lockdown restrictions.
The weekly Davis Index for zinc galvanizer’s dross on Monday settled at Rs194,560/mt ex-works Delhi producer, down Rs5,557/mt driven by lower LME levels. The index for the same grade in Mumbai settled at Rs192,650/mt ex-works producer, down by Rs4,075/mt. Primary zinc prices have also been reduced by Rs3,000-4,000/mt in a week which led dross offers to decline.
Markets for the grade in both Delhi and Mumbai weakened as demand dropped while some industry participants are still gearing up to resume production. Prices for the grade varied from producer to producer on Monday. Offers for dross in Delhi were heard between Rs190,000-195,000/mt.
The Davis Index for secondary zinc ingot in Delhi settled at Rs202,283/mt ex-works consumer, down Rs917/mt from a week ago. Prices were lowered to attract trades in a rather quiet market. A fall in LME levels has also pressured domestic prices. The weekly Davis Index for secondary zinc ingot for Mumbai fell by Rs1,437/mt to Rs201,014/mt ex-works consumer. Prices for secondary zinc ingot fell less severely as brass manufacturers have been permitted to resume work in several cities while abiding to mandatory COVID-19 restrictions and norms. Demand is likely to rise in the coming weeks.
The markets for secondary zinc ingot strengthened over the week in terms of spreads with demand improvement in sight which supported prices, however, a drop in raw material prices has resulted in lowered offers on Monday.
The Davis Index for imported new zinc diecast on Monday settled at $2,344/mt cfr India port, down by $16/mt driven by a fall in LME levels. Demand will slowly improve for the grade with brass manufacturers returning to markets which will stimulate demand for secondary zinc ingots and new zinc diecast. Varying offers were heard on Monday for the grade between $2,300-2,400/mt levels, deals in the range. Some offers were heard at $2,500/mt cfr India port.
With the fall in diecasting, demand for zinc alloys has also dropped. Prices are moving in line with LME. The weekly Davis Index for Zamak #3 on Monday settled at Rs252,967/mt del India consumer, down by Rs758/mt. Producers have reduced prices in sync with LME and lower demand.
Several diecasting units are shut in the country amid a rise in COVID-19 cases and lockdowns. Also, production cuts by auto manufacturers have weighed down on diecasting operations. The weekly Davis Index for Zamak #5 on Monday settled at Rs255,967/mt del India consumer, down by Rs758/mt. Prices for Zamak made from primary zinc fell in line with LME.
The official three-month LME zinc contract fell by $55/mt or by 2pc in a week to $2,998.5/mt on Friday. The contract marked a sharp decline on June 3, slipping by $86/mt or 3pc in a single session, which led to a fall in domestic zinc scrap and ingot prices.
Markets for Zamak #3 and Zamak #5 strengthened in terms of spreads compared to the prior week with demand slowly improving in several cities with buyers returning to the market, showing a promise of improving demand in the coming weeks.
With the easing of lockdown in several states, demand is likely to improve for zinc and if infrastructure and construction sectors pick pace, demand for galvanizing will strengthen. Demand from the auto sector may be a laggard amid the shortage of semiconductors and production cuts across major manufacturers but should be offset with pent-up demand from infra and construction sectors.