India: Zinc prices shows upward trend w-o-w

Domestic special high grade (SHG) zinc ingot prices exhibited an upward trend w-o-w, at INR 345,000/tonne (t) ($4,445/t) on 3 June 2022, exw-Delhi. Prices were up 4.86% from INR 329,000/t ($4,239/t) seen on 27 May 2022.

Zinc ingot prices on the London Metal Exchange (LME) were recorded at $3,896/t on 1 June 2022, a w-o-w increase of 3.9% from $3,750/t on 25 May.

On the Multi Commodity Exchange (MCX), zinc ingots traded at INR 335,850/t ($4,327/t), a w-o-w increase of 1.6%, as against INR 330,400/t ($4,257/t) on 27 May.

Prices are gradually increasing in the domestic market, as per sources. The key reasons are as follows:

Increased exchange prices: It is observed that zinc ingot prices increased on both exchanges - LME and MCX - by around 4% and 2% respectively. Exchange prices play an important role in deriving domestic market prices. And, positive sentiments in both exchanges kept domestic prices on the positive side too.

Labour shortage: Some sources believe that there is shortage of labour at zinc manufacturing facilities. Thus, output of zinc is lower in the market, creating a gap in demand and supply. This is also a factor driving up prices.

HZL price increase: Notably, Hindustan Zinc Ltd (HZL), the primary SHG zinc ingot manufacturer in India, increased its prices two-fold this week by INR 15,100/t ($195/t) to INR 353,600/t ($4,555/t) against INR 338,500/t ($4,361/t) last week. This, in fact, is a key reason for the hike in domestic prices.

Short-term outlook

Some sources believe that the labour concern will remain in the domestic market till the monsoon ends. Thus, prices in the domestic market will follow a positive trend in the coming days.