India's aluminium alloyed ingot imports surge 60% in H1CY24 amid scrap challenges
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- Geopolitical issues impact trade, raise scrap prices
- Costlier scrap encourages direct import of ingots
- Outlook on ingot imports mixed in the short term
Morning Brief: India's imports of alloyed aluminium ingots surged 60% to around 112,158 tonnes (t) in the first half (January-June, 2024) of 2024 (H1CY'24). Volumes in the same period in 2023 were at 70,780 t.
Why did alloy ingot imports surge in H1?
Red Sea crisis hits scrap imports: The crisis in the Red Sea, which began in October 2023 and subsequently escalated, caused a shipping crisis that severely disrupted global trade and supply chains. This particularly impacted routes through the Suez Canal, a critical artery handling approximately 30% of the global container trade.
Russian sanction impacts LME aluminium, scrap pricing: LME aluminium prices witnessed a notable increase in April 2024 which continued till May, peaking at $2,610/t, propelled by the western sanctions on Russian metals. These sanctions were designed to cut off a significant revenue stream for Russia, which has been supporting its military activities in Ukraine through metal exports. This geopolitical development introduced uncertainty in global supply and demand dynamics and further exerted an upward pressure on imported scrap prices. All grades of scrap spurted to over $2,000/t.
Aluminium scrap and ADC12 price trends in H1
Key imported grades rise 4-7%: According to BigMint's analysis, in H1CY'24, average prices of key grades like UAE tense (8-9%), CFR Mundra, stood at $1,820/t, marking a 4% increase y-o-y. UK zorba averaged $2,064/t, reflecting around 7% increase over the same period in 2023. Additionally, other grades such as UAE taint tabor and extrusion saw an approximate 4% y-o-y increase in H1CY'24.
Domestic scrap rises 9%: In H1CY'24, Delhi tense scrap prices rose 9% to INR 177,280/t, from INR 162,130/t in H1CY'23, as per BigMint assessment.
Non-OEM ADC12 up 6%: The non-OEM prices of ADC12 in Delhi stood at INR 208,067/t, up 6% in H1CY'24 from INR 196,450/t in H1CY'23.
Outlook: The short term looks mixed. Prices of imported alloy ingots, which substitute domestic ADC12 material, may see a decline since the domestic counter-part has seen a downward correction.