All zinc grades fell by around Rs2,000-3,000/mt ($27-40/mt) on Monday from the week prior, driven by a fall in LME and lack of demand due to lockdowns in Delhi and Mumbai. Markets, in terms of spreads, strengthened over the week despite a dip in prices.
The official three-month LME on Friday settled at $2,940/mt, down $44/mt or by 1.47pc from the previous week. A fall in LME prompted offers for primary zinc prices to be revised downwards from the prior week by almost Rs4,000/mt. This overall, led to a lowered offers across scrap and ingot grades.
A drop in primary zinc prices triggered producers of zinc dross to reduce offers as demand too suffered in the city. On Monday, Mumbai was on high alert as cyclone Tauktae brought heavy rain. The city is already under lockdown and physical trades were extremely rare.
The weekly Davis Index for zinc galvanizer’s dross in Mumbai on Monday settled at Rs191,200/mt ex-works producer, down by Rs2,250/mt. Very few offers and bids were heard as markets are almost shut. The spreads for the grade narrowed, depicting a strengthened market despite lowered offers but LME levels fell 1.5pc while zinc dross prices dipped 1pc.
The weekly Davis Index for secondary zinc ingot in Mumbai on Monday settled at Rs199,200/mt ex-works consumer, down Rs2,000/mt. Offers were pushed down as LME levels fell. Spreads widened as offers were not reduced in line with LME. Rupee remained almost unchanged at Rs73.2 against the US Dollar.
The weekly Davis Index for zinc galvanizer’s dross in Delhi settled at Rs196,325/mt ex-works producer, down by Rs2,125/mt and the index for secondary zinc in Delhi settled at Rs202,200/mt ex-works consumer. The dip in prices can be attributed to lockdown and LME levels’ fall. Only a few bids and offers were heard, and prices were only indicative as no significant trades were heard due to the ongoing lockdown.
Delhi markets strengthened in terms of spreads compared to the prior week for dross and secondary zinc ingots as prices fell by not more than 1.3pc whereas LME fell by over 1.5pc.
A complete lockdown in Delhi which has now been extended till May 24, has started creating supply side hurdles specifically since end of last week. Several market participants are taking time off as COVID-19 cases are mounting and creating an unsafe place to work.
The weekly Davis Index for Zamak #3 on Monday settled at Rs247,638/mt del India consumer, down by Rs 3,312/mt. Diecast shops are mostly shut across several states which has brought down demand to a great extent. However, prices fell as primary zinc prices were reduced. The consuming sectors including auto and construction are now struggling amid the lockdown. With all local non-essential shops shut, demand from end-users has taken a hit which is impacting the upstream demand too. The weekly Davis Index for Zamak #5 on Monday settled lower by Rs3,312/mt at Rs250,638/mt del India consumer. Markets strengthened as spreads widened for both, Zamak #3 and Zamak #5. There is a possibility that lower demand and LME levels may push prices down in the coming days.