An increase in production activities pushed up demand for zinc scrap in India. The easing of lockdown in many states has helped manufacturers get back to higher capacity utilization.
In Mumbai, demand for dross was robust on Monday. Galvanizers raised offers in line with the jump in LME and primary zinc prices. The weekly Davis Index for zinc galvanizer’s dross, Monday, reached Rs198,483/mt ($2,664/mt) ex-works Mumbai producer, up by Rs7,283/mt driven by improving trades and higher LME levels. The weekly Davis Index for the grade in Delhi settled at Rs193,487/mt ex-works producer, up by Rs3,095/mt.
Markets for dross have improved in terms of spread in both Mumbai and Delhi as more traders and manufacturers re-entered after a brief pause during the lockdown. The Indian rupee is sliding towards a yearly low, which could raise import prices and increase demand for domestic material.
Dross is mainly consumed by brass and oxide manufacturing industries. Both these industries are increasing production owing to pent-up demand. Auto production is expected to rise in the coming months as reported by major manufacturers, which would also drive demand for zinc scrap.
Primary zinc prices move in tandem to LME zinc. The official three-month LME zinc on Friday settled at $2,973/mt, up by $40 or 1.36pc from the preceding week, which boosted zinc scrap prices. Dross manufacturers, therefore, raised offers on Monday, which were largely accepted by the market and led to reasonable trades.
The Davis Index for secondary zinc ingot, Monday, settled at Rs195,500/mt ex-works Delhi consumer, up by Rs2,383/mt on higher offers. Demand for secondary zinc ingot remained slightly muted but is expected to improve in the next couple of weeks as trades return to normal levels undeterred by lockdowns and supply issues. The weekly index for secondary zinc ingot for Mumbai settled at Rs201,300/mt ex-works consumer, up by Rs6,933/mt. Prices remain firm as Mumbai markets are now open after stringent lockdown.
The Davis Index for imported new zinc diecast settled at $2,245/mt cfr India port, up by $1, almost flat from the prior week. The domestic market is on a path to recovery and demand is gradually expected to recover as inventories are offloaded across the production chain with increased end-user consumption. With the rupee value depreciating, imports have started becoming expensive compared to domestic grades. Some buyers have decided to wait, resulting in tepid trades for new zinc diecast.
The weekly Davis Index for Zamak #3, Monday, settled at Rs254,500/mt del India consumer, up Rs2,037/mt induced by LME’s rise, which in turn pushed up primary zinc prices. Diecasters are optimistic amid an increase in orders from the auto sector.
Markets for zinc alloys weakened in terms of spreads despite a rise in prices. Markets are still in recovery mode as demand is not as strong as it should be from diecasters which has pressured prices.
The weekly Davis Index for Zamak #5 settled at Rs257,500/mt del India consumer, up Rs2,100/mt, driven by an increase in offers as raw material costs increased.