India: Aluminium ADC12 prices continue to rise on higher raw material costs

Aluminium ADC12 alloy ingot (automobile equivalent) spot prices increased by INR 2,000/t to INR 207,000/t w-o-w exw Delhi, excluding GST. This rise was observed amid an increase in local tense scrap prices in both north and south India where shortages continue to be a significant concern, according to BigMint assessment.

Presently, tense offers in Chennai stand at INR 173,000/t. However, trade levels are in the range of INR 172,000-172,500/t. Additionally, the spot price for ADC12 in Chennai stands around INR 210,000- 212,000/t exw, excluding GST.

Market dynamics: Insights from participants

ADC12 prices remained robust this week, primarily due to the constrained availability of tense scrap. These elevated levels in prices are impacting the capacity utilisation of mid-scale manufacturers in the northern region.

While there is a market demand for ADC12, the overall activity is moderate. Suppliers in the southern region are reluctant to sell ADC12 for less than INR 210,000/t. Nevertheless, some buyers are successfully obtaining the material at slightly lower rates, around INR 208,000/t, from their regular suppliers.

Aluminium alloy ingots price trend consistently maintains the upward movement followed by strengthening raw material prices amid tight supply chain and procuring it on premium bids like losing an appropriate conversion spread as it barely hovers around INR 30,000/t even if we consider the OEM price for Mar'24, shared by a medium scale alloy producer.

ADC12 ingots supply chain seems to be a concern as of current market dynamics amid the tight availability of casting scrap restrain most of the manufacturers from booking new orders specifically for the new buyers, shared by another manufacturer.

In Delhi, reference prices for silicon 553 are around INR 193,000-195,000/t, exw with a credit payment term, excluding GST.

Pricing trend

Imported tense scrap prices from the Middle East, particularly from the UAE, rose by $35/t to $1,825/t on yesterday's assessment. Tense (6-7%) from the US was heard at $1,870/t, up by $20/t. The price for Zorba 95-5 from the UK stood at $2,040/t CFR Nhava Sheva.

However, three-month futures for aluminium were currently at $2,263/t, reflecting a $30/t rise w-o-w. China-origin silicon 553 prices were at around $2,025/t CIF Mundra, up $15/t w-o-w.

Domestic market

In the domestic space, scarcity of raw materials, particularly tense scrap, has kept prices on the higher side. Tense scrap prices are at INR 178,000/t, exy-Delhi (excluding GST).

Recent offers, deals

ADC12 was bought at INR 209,000-210,000/t, ex Chennai - 70 t.

ADC12 bought at INR 212,000/t, ex Chennai (45 days credit) - 10 t.

ADC12 traded at INR 207,000/t ex Delhi ~20 t.

ADC12 traded at INR 210,000/t ex Delhi ~ 25 t.

Outlook

Given the prevailing market dynamics, where a consistently constrained supply chain of raw materials and delayed shipments of overseas scrap have impacted domestic prices, coupled with positive sentiments about the upcoming monthly price settlements by automobile companies, there is a potential for further price increases in the near term.