India: ADC12 aluminium alloyed ingot prices dip w-o-w

High inventories in auto sector raise concerns

Some manufacturers currently operating at a loss

Domestic spot prices of aluminium ADC12 alloyed ingots inched down by INR 1,000/t w-o-w in both the northern and southern regions of the country pressured by weak demand and stable domestic raw material costs.

BigMint's benchmark assessments for ADC12 (non-OEM) grade stood at INR 202,000/tonne (t) in Delhi and INR 204,000/t in Chennai, down INR 1,000/t w-o-w.

Meanwhile, three-month London Metal Exchange (LME) aluminium prices hovered at around $2,560/t, down $25-30/t w-o-w. Stocks at LME-registered warehouses stood at 755,350 t.

Current market scenario

The alloyed ingot market is facing substantial challenges, with a producer saying, "The market is expected to hit rock bottom, and many manufacturers are already operating at a loss. This downturn is leading to production cuts by several small- and medium-sized alloy units, particularly among manufacturers who depend on scrap." Currently, most manufacturers are relying on domestic scrap due to higher costs of imported materials.

Prices for domestic aluminum ADC12 alloyed ingots have trended downward, though minor fluctuations have been seen. While some transactions were heard, overall demand remains subdued.

Moreover, demand from the overseas market, especially from Japan, India's largest export destination for ADC12, has yet to rebound. As a result, alloyed ingots are being predominantly sold in the domestic market, creating an oversupply of ADC12 ingots amid sluggish demand.

In south India, most participants expect a slowdown in trade activity and demand over the next two months, as the northeast monsoon is yet to arrive. Flooding and operational disruptions may arise in the near term due to the upcoming rainy season.

Imported aluminium

BigMint's benchmark assessment for tense scrap originating from the UAE was at $1,790/t, up by 1.7% w-o-w, and zorba 95/5 from the UK was at $2,090/t, both CFR west coast, India.

The price increase in aluminium was fuelled by a significant rise in alumina prices, which is used to produce primary aluminium. Alumina supply has tightened due to a bauxite shortage caused by disruptions in Australia and Guinea, with bauxite being the raw ore that is refined into alumina. Additionally, Chinese alumina consumption has been robust this month, as aluminium producers increased their output.

China's silicon market

According to BigMint's assessment, prices of China's silicon 553 moved up by $30/t w-o-w to $1,730/t CFR Mundra. Meanwhile, offers from the suppliers' side were at $1,740-1,750/t. However, bids were heard at $1,710-1,720/t.

Prices have edged up slightly due to rising freight costs, but demand from India remains subdued, especially in the underperforming aluminum ADC12 sector.

Meanwhile, sea freight rates for a 20-foot container from China to Mundra are currently ranging between $1,700 and $1,900.

Domestic scrap prices rangebound

In the domestic market, tense scrap prices edged up w-o-w in both Delhi and Chennai. According to BigMint's assessment, domestic tense scrap prices stood at INR 172,000/t ex-Delhi NCR and INR 173,000/t ex-Chennai, majorly driven by the rise in LME aluminium prices.

Despite a slight increase in offers for domestic casting scrap in both the northern and southern regions, workable prices remained at INR 170,000-172,000/t in both Delhi and Chennai.

Outlook

In the near term, ADC12 prices are expected to stay within a narrow range. Market activity typically slows during the Diwali holidays. However, once the festivities conclude, the market may regain momentum.