India sees w-o-w decline in imported aluminium scrap prices amid lower LME, Eid holiday

• Downward correction in imported aluminium scrap prices
  
  
• Taint tabor exports from the US may decline
  
  
• Domestic tense scrap prices inch down in Delhi, Chennai
  
  

India's imported aluminium scrap prices have witnessed downward corrections this week amid declining LME aluminium prices and weak buying interest in the market.

The drop in prices can be attributed to the decline in 3-M LME aluminium prices at the time of reporting was down 3% w-o-w at around $2,473/t. Notably, aluminium prices fell amid doubled LME inventories within a month, a widening cash-contract gap, and the Fed's rate hold. Chinese export strength offset slower import growth, while alumina supply disruptions from China and Rio Tinto raised supply chain concerns.

According to BigMint's assessment, tense scrap originating from Middle East particularly UAE saw a $30/t drop settling at $1,830/t and zorba 95/5 from UK witnessed a marginal drop to $2,130/t, CFR West Coast, India.

Meanwhile, a few grades like US tense 6-7% and UK taint tabor C/S recorded a drop by up to $60/t w-o-w moving down to $1,860/t and $1,800/t, both CFR West Coast, India.

Market commentary

A buyer source mentioned, " Currently, the market is experiencing slow activity with limited business transactions. Buyers are anticipating further price corrections despite prices remaining elevated, even as the LME has dropped to $2,400/t levels."

Meanwhile, the Middle East market is closed due to the Eid holiday, which typically lasts five days from 14 June 2024 (Friday) to 18 June 2024 (Tuesday), and activity is expected to resume at a slower pace thereafter. No firm offers were heard from the suppliers from the Middle East region amid the holidays.

An alloy manufacturer informed, " In India, buying interest is expected to remain subdued with potential improvement anticipated after July 2024. Alloy manufacturers appear well-supplied with scrap stocks, enough to meet orders for the next 1-2 months, largely due to delayed consignments that arrived in May from bookings made between January and March."

A trader noted that the US domestic market is strong, especially for taint tabor and UBC (used beverage cans), with stable price offers. Looking forward, there is anticipation among market participants that taint tabor exports from the US may decline as more rolling mills are scheduled to open, increasing domestic demand for taint tabor scrap.

Suppliers quoted US taint tabor HRB (2-3%) at $2,030/t, while buyers were bidding around $1,980/t, indicating a notable gap between bids and offers. Similar price disparity was observed for UK-origin wheels scrap, which suppliers offered at approximately $100-$120/t below LME aluminium prices, while bids did not exceed $2,300/t CFR West Coast, India.

China's silicon market

According to BigMint, prices of China's silicon 553 have risen and were at $2,040/t CFR Mundra witnessing a $15/t rise from the previous price level majorly because of rising freight rates particularly in the South-East Asian region due to the ongoing port congestions and limited availability of containers.

Moreover, buying interest remained low as major aluminium alloy manufacturers possess sufficient silicon stocks, which has notably dampened market activity.

The sea freight fee from China to Mundra was heard at $4,000-$4,200 per 20-ft container.

Domestic scrap market

In the domestic market, tense scrap prices have seen marginal drop in both Delhi as well as Chennai region. BigMint's assessment shows domestic tense scrap prices (ex-Delhi NCR) at INR 183,000/t and INR 184,500/t, ex-Chennai.

Domestic buyers are expecting scrap prices to decrease, despite a slight increase in settlement prices for ADC12 by India's largest automobile manufacturer in July 2024.

Outlook