India’s import restrictions levied on zinc dross, effective January, has moved importers to buy domestically, which raised prices, the repercussions of which are still in force.
Zinc dross is consumed by zinc oxide manufacturers. Zinc oxide has multiple applications including catalysts, ceramics and glass, skin care products, pharmaceuticals, industrial coatings and paintings, PVC, and rubber and footwear, among other applications.
In 2019, India imported 23,811mt of zinc dross.
Local dross prices were at their highest in the last two weeks of January 2020, Rs161,000-162,000/mt, ex works Mumbai and Delhi producers. In the beginning of March, prices of dross reached Rs157,000/mt ex-works Mumbai, with supply tightening.
The scarcity was offset by tyre companies cutting down zinc oxide orders by 40pc, which in the first week of March, pushed prices down to Rs149,000/mt ex works Delhi producers. Prices have been toggling between Rs150,000-162,000/mt, ex-works India producers in Jan-March, and dross buyers expect it to climb again.
The Indian zinc oxide industry has been defaulting on sale commitments due to the unexpected step taken by the government.
Importers of dross have filed a request with the government to reverse the import restriction, to no avail yet. Zinc dross buyers believe there is a crisis in the dross market with prices of local dross rising and imports, of what is now restricted product, completely cut off.
Major Indian cities have a strong demand for zinc dross, but the industry relies on the auto sector, which has been in recession for the last six months, and the COVID-19 impact expected to worsen the situation.
Dross buyers say that with prices of dross rising and auto ancillaries cutting consumption of zinc oxide, oxide manufactures are stuck between the devil and deep blue sea.
Zinc oxide can be made from zinc score, but it does not deliver the quality zinc dross offers. Furthermore, it can also be made from primary zinc metal, but it is not cost efficient.