India: Aluminium ADC12 prices rise amid raw material shortage
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Aluminium ADC12 alloy ingot (automobile equivalent) spot prices rose by INR 3,500/t w-o-w to INR 202,000/t exw Delhi, excluding GST. The uptick is largely attributed to the surge in local Tense scrap prices amid shortage in north as well as south India, as per BigMint's assessment.
Why surge in costs?
In the north Indian market, soaring prices resulted from a scarcity of vital raw materials, especially tense scrap, which is currently priced at INR 171,000/t exy Delhi (excluding GST).
Presently, tense offers in Chennai stand at INR 165,000/t. However, bids are in the range of INR 162,000-163,000/t.Considering the ongoing scarcity in the tense scrap market, prices are likely to reach INR 168,000-170,000/t, BigMint notes. Additionally, the spot price for ADC12 in Chennai currently stands at INR 200,000-202,000/t levels exw.
The current spread from Tense to ADC12 stands at INR 31,000/t, However mills are now moving towards INR 35,000/t gap as per earlier trend.
Commentary on North and South markets by market participants
In an effort to produce ADC12, producers are increasing the usage of Zorba, Trump, and other substitutes for Tense. This trend is increased by a significant shortage of tense across the entire northern region, creating a substantial challenge in the market, sources informed BigMint.
A producer source stated "Providing ADC12 on an immediate cash basis is not feasible, even for our regular customers. While we have ADC12 stock up to certain levels at our plant, we are not able to supply below INR 205,000/t at the moment. We are awaiting the March price announcement from Maruti to determine new rates".
An ADC12 manufacturer from south India stated "Inquiries for ADC12 from Pune region has increased to South region as the price is INR 2,000-3,000/t less in South compared to north, Currently ADC12 is being offered at INR 206,000/t delivered to Pune for this month, however their bid price is 204,000/t exw".
A producer of small to medium-scale aluminum alloy ingots has shared that they have pre-booked orders for upcoming shipments until a specified period. This strategic move is in reaction to a notable shortage of the crucial raw material, casting scrap, as highlighted by BigMint.
Pricing trend
Imported Tense scrap prices from the Middle East, particularly from the UAE, rose by $20/t to $1,720/t yesterday. Tense (6-7%) from the US was heard at $1,790/t, up by $30/t. The price for zorba 95-5 from the UK stood at $1,960/t CFR Nhava Sheva.
However, three-month futures for aluminium were currently at $2,216/t, reflecting a rangebound levels w-o-w. China-origin silicon 553 prices were at around $2,030/t CIF Mundra, down $40/t primarily because of Lunar year holidays.
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 171,000/t, while taint tabor scrap prices are at INR 170,000/t exy-Delhi (excluding GST).
Around 10 t tense scrap was heard sold at INR 164,000/t exw Chennai.
Recent deals
Around 20 t ADC12 was heard traded at INR 203,000/t with 40 days credit payment terms Exw Chennai.
Around 200 t UK-origin aluminium taint tabor HRB was traded at $1,725/t CIF West Coast India.
Around 75 t West Africa origin Tense 7-8% was heard traded at $1,825/t CIF Chennai.
