Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

In the week ending Monday, zinc scrap and secondary ingot prices fell, pressured by lower bids in a quiet market that is yet again challenged by rising COVID-19 cases and a threat of a third wave of infections in India. 


Despite a rise in LME three-month zinc contract, scrap prices in both Mumbai and Delhi sunk. Lower bids and diminished demand from consuming sectors have pushed prices down on Monday. The official LME zinc three-month contract settled at $2,932/mt, up by $35.5/mt on Friday from the prior week. The primary zinc manufacturer in India has, however, raised prices by approximately Rs4,000/mt from a week ago in line with the rise in LME. This pushed zinc alloy prices upwards as raw material prices increased. 


The weekly Davis Index for zinc galvanizer’s dross on Monday stood at Rs190,392/mt ($2,361/mt) ex-works Delhi producer, down by Rs4,833/mt. Markets weakened for the grade as demand failed to pick up pressured by negative sentiments in the country owing to the highly contagious Delta variant adding to higher COVID-19 cases. The Davis Index for zinc galvanizer’s dross for Mumbai settled at Rs1,91,200/mt ex-works producer, down by Rs3,750/mt from a week prior. Mumbai markets also weakened for the grade in terms of spreads which widened from the prior week. Dross prices fell despite a rise in primary zinc prices on Monday. This reflects on the poor market demand in India. 


Brass manufacturers and oxide manufacturers who export material are the only units that can cushion the consumption of both domestic dross and secondary zinc ingots. Scrap sellers are willing to empty inventories at lower rates as domestic demand shows no signs of improvement and has the potential to drag prices further. 


The weekly Davis Index for secondary zinc ingot for Delhi settled at Rs193,117/mt ex-works consumer, down by Rs2,388/mt and the weekly index for the same grade for Mumbai settled at Rs194,367/mt ex-works consumer, down by Rs3,271/mt. Brass manufacturers witnessed a drop in orders which resulted in trades of smaller secondary zinc ingots. Brass manufacturers were firm on lower bids as domestic demand has faded considering the gradual drop in the prior weeks. Production cuts may be initiated if the market continues to slump. 


The weekly Davis Index for new zinc diecast on Monday settled at $2,244/mt cfr India port, down by $23/mt. Offers were heard ranging $2,235-2,250/mt cfr India port, however, no trades were heard at these levels. Bids were fairly below the offer prices on Monday. Imports will slip if offers are not reconsidered and lowered for Indian buyers. 


Zinc alloys

The Davis Index for Zamak #3 rose by Rs3,673/mt to Rs252,463/mt del India consumer on Monday from a week prior and the index for Zamak #5 settled at Rs255,400/mt del India consumer, up by Rs3,610/mt from prior Monday. Offers were up in line with the higher primary zinc prices and LME levels. Markets improved for the grade in India owing to firm offers set by the manufacturers. Export markets for the material remain relatively stronger than domestic markets which supported alloy prices. Die casting units in the South, however, whined about the export orders dipping too. 


Markets for both the zinc alloys strengthened in terms of spreads as ingot prices were firm given the drop in rupee making imports pricey and shifts consumer’s focus on domestic material. Also, export markets for zinc alloys continue to show some demand intensity which gives the domestic alloy manufacturers window to raise prices in line with the LME and primary zinc prices.


The domestic auto sector is recuperating and production is set to ramp up ahead of the festive season, which could boost zinc scrap and ingot prices if the expected threat from the third wave of COVID-19 is controlled. On the other hand, sentiments can fast turn negative and pressure prices, as the latest research report from leading banker SBI claims the third wave will arrive in September. 



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