India: Imported aluminium scrap market turns bearish w-o-w

The Indian aluminium scrap market has recently experienced a slight downward correction, accompanied by measured trading activities. Additionally, the futures contract cash price of aluminium has declined. Market participants have noted a significant disparity in prices, ranging from $30-40/t w-o-w across all grades of aluminium scrap.

At the same time, the three-month futures for aluminium currently hovered $2,201/t at the time of reporting, reflecting a weekly decrease of approximately $40-50/t. Furthermore, inventories in the LME warehouses stood at 471,875 tonnes (t) at the close of yesterday's trading, representing a decrease of 7,900 t w-o-w.

In SHFE warehouses, aluminium inventories have declined by 4.5% from 125,981 t to 120,266 t compared to the previous week. SHFE aluminium futures have also experienced a 0.4% decrease w-o-w, reaching RMB 18,884/t ($2,663/t). This marked the second consecutive week of outflows in SHFE inventories.

Major mills in the western and northern regions of India have scaled back their production levels, resulting in limited demand for aluminium. Sources have indicated that zorba-grade scrap has become less viable in the Indian market as recyclers are obtaining better prices from Far Eastern countries.

The market has acute liquidity issues where the usual immediate payment cycle got extended by 15-20 days instead of 5-6 days and margins have been affected among most of the traders, as shared by one of the traders or indentors based in the northern region.

Finished products have limited demand despite the healthy monthly automobile sales volumes in most of the segments, whereas, on the other hand, the die-casting industry is diversely impacted as the monthly prices have continuously narrowed and have to bear this scenario shared by one of the die-casters in the northern region.

A reliable source has highlighted that small-scale plants have temporarily halted their operations due to significant losses. Additionally, mills have reduced their workforce to mitigate their losses. As a result, many market participants have adopted a cautious approach, opting to wait and observe the market trend.

Currently, China's origin silicon 553 is at around $1,935/t, CIF western coast, India.

Domestic aluminium scrap market

In the domestic aluminium scrap market of India, prices have remained steady compared to yesterday's closing. Tense scrap prices stood at INR 155,000/t, while utensil scrap prices were at INR 172,000/t exy-Delhi (excluding GST).

Outlook

Market participants are currently anticipating a potential range-bound or nominal downward correction in the market in the near term. As a result, players are adopting a cautious approach to observe how the market unfolds.