India: Aluminium alloy ingot prices fall to 9-month low; down INR 5,000/t m-o-m

Maruti Suzuki India Limited (MSIL), 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 197,250/t for October 2023, down INR 5,000/t m-o-m. Prices have slumped to a nine-month low since January 2023, data maintained by SteelMint reveals.

Factors that could have led to the price reduction are lower exports, limited capacity utilisation rate, and moderate raw material availability.

Falling exports: Export volumes fell to a 19-month low of 8,952 t in July 2023 from 24,772 t in January 2022, although fluctuating export volumes were recorded during H2CY22.

Exports of alloy ingots to preferred destinations like China (16,505 t) and Japan (93,183 t) fell by 23% at 109,688 t during January-July 2023 as against 142,287 t (China 75,039 t and Japan 67,248 t) during January-July 2022.

Total export volumes fell by over 2% to 1.03 mnt in January-July this year as against 1.06 mnt in the year-ago period.

Limited utilisation: Limited capacity utilisation seems to be another concern among alloy producers which is gradually piling up selling pressure prior to output adjustments which might ultimately affect production adjustments.

The aluminium alloy ingot ADC12 reference price hovers at INR 186,000-187,000/t exw-Faridabad, excluding GST. However, some die-casters quoted their bid prices lower by INR 4,000-5,000/t on immediate payment terms.

Domestic raw material prices firm: The local aluminium scrap market followed the trend of primary producers, however, prices were range-bound owing to moderate availability. Currently, tense prices are largely stable at INR 154,000-155,000/t, while utensil prices are at INR 172,000-173,000/t, both exy-Delhi and excluding GST.

Outlook

India's auto production figures are showing an uptick and prices may remain range-bound ahead of the festive season. India's automobile production increased by 14.3% m-o-m to 2.4 million units in August, according to data from Society of Indian Automobile Manufacturers (SIAM). Sales rose 4.34% y-o-y compared with 2.3 mnt in August 2022.