India: Imported aluminium scrap prices remain rangebound despite LME rebound

Imported aluminium scrap prices in India have remained rangebound w-o-w despite the rebound in LME prices. Prices for all grades are within a range and showing variations of $20-$30/t this week amidst cautious approach among market participants and low purchase enquiries.

Meanwhile, three-month LME aluminium prices hovered at $2,300-2,320/t, a slight uptick w-o-w. Stocks at LME-registered warehouses stood at 903,600 tonnes (t). Aluminium prices rebounded after hovering at three-month lows.

Additionally, amid upcoming holidays in local markets, bid-offer disparity emerged in the market, buyers opted wait and watch mode.

According to BigMint's assessment, Tense scrap from the Middle East, particularly the UAE, saw a increase of $30/t, settling at $1,730/t. Zorba 95/5 from the UK remained rangebound at $1,950/t CFR west coast, India.

A source stated, "The market is currently experiencing a significant slowdown, with minimal buying interest and very few transactions taking place. Inventory levels are adequate, but the lack of a clear transaction point highlights the ongoing stagnation. This sluggish pace of activity is further driven by persistent bid-offer discrepancies".

A trader mentioned, "Yard owners, despite enough stocks, are reluctant to offer materials as they expect LME to move up further."

However, trade activities remained slow, prompting yard owners to supply small quantities to buyers in order to maintain liquidity.

China's silicon market

Prices of China's silicon 553 have dropped $20/t reaching $1,740/t CFR Mundra amid easing freight rates. However, buying interest was low because major aluminium alloy manufacturers have sufficient silicon supplies.

Additionally, the freight rate from China to Mundra was heard at $1,980-$2,000/20-foot container.

Japan's aluminium demand falls

According to the Japan Aluminium Association, Japan's aluminium demand (domestic and export) fell by 4.7% in the first quarter of 2024, totalling 882,500 tonnes (t). Domestic demand decreased by 4.1% to 849,000 t. Meanwhile, exports dropped significantly by 17.8% to 34,000 t.

The transportation sector, which is the largest consumer of aluminium in Japan, representing 45% of the total demand, saw a 1.2% decline in demand to 382,000 t. This decline was attributed to certification fraud issues affecting auto manufacturers. The construction industry also experienced a 2.5% decrease in demand, dropping to 124,000 t due to a slowdown in new housing starts and reduced use of aluminium in construction.

Domestic scrap market

In the domestic market, tense scrap prices remained rangebound in both Delhi and Chennai. According to BigMint's assessment, domestic tense scrap prices are now at INR 174,000/t ex-Delhi NCR and INR 175,000/t ex-Chennai. Market participants expect prices to move up in the near term.

Outlook

It is expected that the market will remain quite slow due to uncertainty on LME and upcoming holidays (Independence Day long weekend). However, prices may gain momentum next week.