India: Aluminium ADC12 prices remain firm despite production adjustments

Aluminium ADC12 alloy ingot prices remained firm at INR 181,000/t, while Tense scrap prices remained largely stable at INR 153,000/t exy Delhi owing to subdued trading activities, marginal decline in aluminium LME levels w-o-w, as per SteelMint's assessment.

At the same time, the three-month futures for aluminium currently hovered at $2,121/t at the time of reporting, reflecting a weekly decrease of approximately $25-30/t. Furthermore, inventories in the LME warehouses stood at 450,225 t at the close of yesterday's trading, inching up by 7,225 t w-o-w.

The Tense scrap prices in India witnessed a downward correction in prices by INR 1,000/t and was at INR 153,000/t exy Delhi, whereas, imported Tense scrap prices from the Middle East region particularly from the UAE contracted by $20/t and recorded at $1,540/t. The existing difference between Tense and ADC12 stands at INR 28,000/t.

On the other hand, China-origin raw material prices like silicon 553 recorded a rise in prices by $20/t and was at $1,955/t w-o-w, as per SteelMint assessment.

In the spot market, the observed price for domestic silicon 553 is INR 174,000-175,000/t with credit payment terms.

Presently, there is a difference of around INR 2,000-3,000/t between domestic Tense scrap in the northern market and tense scrap mix casting imported from the Middle East. The imported Tense mix casting material has a landed cost of approximately INR 150,000/t, excluding financing costs. This cost is lower than the local material, which is priced at INR 153,000/t exy-Delhi.

Currently, the pace of production is sluggish, leading to an increased availability of raw materials.

Sources indicate that, in line with market dynamics, the current Tense material from the Middle East appears to be suitable for use in India.

"Certain established players have slightly adjusted their production levels at present. However, this situation is comparatively better than the complete halting of operations observed by few small and medium-scale producers in the northern and western regions over the past two months", trade source quoted.

A trader mentioned that "A few deals of ADC12 has been sold at an internal discount which is slightly lower than the market price range and discount price vary by INR 1,000-2,000/t among trade participants due to inadequate transactions notified die casting players. However, transactions are not yet confirmed till the time of reporting".

One of India's largest automobile manufacturer and the price setter in the domestic aluminium alloy ingot space, announced its monthly aluminium alloy ingot ADC12 settlement prices at INR 191,000/t for January 2024, up by INR 2,000/t m-o-m.

The spot market reference price for A356 is in the range of INR 219,000-220,000/t, while the price for AC4B ranges from 197,000 to 198,000/t with credit payment terms. In Gujarat, ADC12 is currently hovering around INR 190,000/t, equivalent to OEM ex-Gujarat, excluding GST.

Outlook

Anticipated by market participants, prices are expected to undergo fluctuations in the near term due to scheduled maintenance activities among automobile companies from mid-December to mid-January. However, the recent upward revision by major player may contribute a positive outlook for prices.