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India: Imported aluminium scrap prices edge down on slow demand, declining futures

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Aluminium

BigMint Bureau

161 Reads

15 Oct 2024, 18:48 IST

India: Imported aluminium scrap prices edge down on slow demand, declining futures

Imported aluminium scrap offers into India decreased by up to 2.6% w-o-w. Offers decreased because aluminium prices on the London Metal Exchange (LME) edged back after witnessing a four-month high recently.

Why global prices fell?

Global prices dropped due to disappointing news from China's Ministry of Finance during a recent policy briefing. Investors had hoped for specific economic support measures, but the lack of detailed announcements led to low trading volumes and negative sentiment, Although the MoF mentioned plans to increase debt issuance but it wasn't enough to boost market confidence.

India's market overview

Surplus, cyclone alert

Moreover in the domestic market, while the north Indian market witnessed excess inventory levels, the southern market was hampered due to a red alert, which was issued in Chennai today and will remain in effect until 18 October due to an approaching cyclone and the risk of heavy waterlogging. Authorities have warned residents to prepare for potential flooding and advised precautionary measures as the city braces for severe weather conditions.

Weak demand, high inventory pull down prices

A producer told BigMint, "Fall in raw material prices are due to falling ADC12 prices, which are primarily due to weak demand and high inventory levels in the automotive sector. This has limited aggressive buying of scrap, putting pressure on prices."

A manufacturer reported that aluminium scrap prices have dropped w-o-w, as buying activity slowed down due to unexpectedly high offers. Although LME prices had recently hit a four-month high, driven by the Federal Reserve's rate cuts, buyers have remained cautious, leading to weaker demand and a subsequent decline in prices.

Three-month LME aluminium prices hovered at $2,540-$2,550/tonne (t), down $30/t w-o-w. Stocks at LME-registered warehouses stood at 769,000 t.

BigMint's assessments

BigMint's benchmark assessments showed that tense from the UAE was priced at $1,760/t, down by 1.1% w-o-w, while zorba 95/5 from the UK was at $2,080/t, both CFR west coast, India.

While TT C/S 9-10% prices from UK was up by $40/t to $1830/t as there were reported shortage of TT material globally, as per sources.

Chinese silicon prices inch down

According to BigMint's assessment, prices of China's silicon 553 went down w-o-w to $1,700/t CFR Mundra. Meanwhile, offers from the suppliers' side were at $1,740-1,750/t.

Domestic scrap prices fall

In the domestic market, tense scrap prices went down w-o-w in both Delhi and Chennai. According to BigMint's assessment, domestic tense scrap prices stood at INR 171,000/t ex-Delhi NCR and INR 172,000/t ex-Chennai.

A prominent automobile manufacturer has announced its ADC12 prices for Nov'24 settlements at INR 209,900/t, reflecting a reduction of INR 6,000/t from October's price of INR 215,900/t. This marks the lowest price level seen in eight months, with the last similar figure recorded in Mar'24. The decline is primarily attributed to sluggish demand in the automobile sector. This pricing update is likely to influence scrap and semi-finished alloy prices in the coming days.

Outlook

In the short term, prices are expected to remain steady within a narrow range as major automakers introduce price cuts, despite the upward trend in LME aluminium prices. However, trading activity is anticipated to pick up pace after Diwali.