India: Aluminium ADC12 prices rise amid limited availability of tense scrap

Aluminium ADC12 alloy ingot (automobile equivalent) spot prices increased marginally and was at INR 205,000/t w-o-w exw Delhi, excluding GST. This rise is observed amid an increase in local tense scrap prices in both north and south India where shortages are still a concern, according to BigMint assessment.

Aluminium ADC12 alloy ingot automobile original equipment manufacturers (OEMs) experienced an m-o-m increase in prices of aluminium ADC12, rising by INR 10,000/t to reach INR 214,000/t exw Delhi, excluding GST.

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 212,000/t exw, excluding GST.

Market dynamics: Insights from participants

ADC12 prices have stayed strong this week due to limited availability of tense scrap. This scarcity is affecting the capacity utilisation of certain mid-scale manufacturers in the northern region.

In Delhi, reference prices for silicon 553 are around INR 192,000-195,000/t, exw with a credit payment term, excluding GST.

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 208,000-209,000/t, from their regular suppliers.

Currently, we are offering our material at a premium for the spot market and closed some deals of more than INR 213,000-214,000/t and raised offers further by INR 2,000-3,000/t with credit days and expect price settler will hike their prices for the next settlement, said an alloy producer based in the Western region (Gujarat market).

Another producer said that, due to tight raw-material supply chains we are running with low inventories and are now concerned about the finished material delivery despite having an appropriate sales price.

Pricing trend

Imported tense scrap prices from the Middle East, particularly from the UAE, rose by $40/t to $1,790/t on yesterday's assessment. Tense (6-7%) from the US was heard at $1,850/t, up by $50/t. The price for zorba 95-5 from the UK stood at $2,030/t CFR Nhava Sheva.

However, three-month futures for aluminium were currently at $2,229/t, reflecting a $40/t rise w-o-w. China-origin silicon 553 prices were at around $2,010/t CIF Mundra, down $20/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 175,000/t, exy-Delhi (excluding GST).

Recent offers, deals

Around 30 t of ADC12 sold at INR 210,000/t, ex Chennai.

Around 400-500 t ADC12 bought in South at INR 216,000/t, ex Chennai at 45 days credit payments.

Tentative export offers from Chennai to CFR Japan is currently heard at 2,400-2,420/t levels.

Outlook

Considering current market dynamics where a consistently tight supply chain of raw material and delayed overseas scrap shipments weighed up domestic prices along with optimistic sentiments towards upcoming monthly price settlement by automobile companies may push prices further for the near term.