Weekly round-up: Base metal prices exhibit downward trend

Base metals prices witnessed a downward correction at London Metal Exchange (LME) which is a major commodity price indicator for global prices. Prices have been continuously weakening over the few days due to rising inflation rates, recession fears, and currency depreciation amid global supply chain disruptions.

The multi-years high inflation rates globally have affected consumer price index (CPI) in most countries. Developed nations have taken certain measures to overcome supply chain disruptions like increase in crude oil supply specifically from the Middle East region which moved up close to 10% m-o-m in May 2022 (as per Organization of the Petroleum Exporting Countries) and hike in interest rates by the US Federal Reserve.

Further, the strengthening US dollar index weighs down most of the global currencies. Indian currency too depreciated to a record low owing to lower foreign reserves amid a significant surge in precious metal imports in May 2022, widening the country's current account deficit (CAD). This was because of the huge foreign institutional investors (FIIs) outflows amid the volatile market along with rising operational costs for Indian importers due to rupee depreciation.

Indian trade participants seemed cautious with limited demand. A few known manufacturing units cut down the capacity utilisation ratio considering the current market dynamics.

Aluminium

SteelMint's assessment for domestic aluminium tense scrap prices stood at INR 156,000/t ($2,001/t) exy-Delhi yesterday, down INR 7,000/t ($90/t) w-o-w. Meanwhile, ADC12 alloy ingot prices stood at INR 197,000/t ($2,527/t) exw-Faridabad, down INR 8,000/t ($103/t) w-o-w.

LME aluminium three-month contract prices were down by $182/t to $2,498/t on 17 June as against $2,680/t on 10 June.

Meanwhile, aluminium scrap import prices of Middle East-origin decreased in the range of $50-230/t, and UK-origin aluminium scrap prices fell in a range of $175-190/t, w-o-w on 14 June, as per SteelMint assessment.

Notably, LME registered warehouses witnessed consistent drop in inventories of aluminium. Stocks stood at 407,875 t, down by 19,475 t, as per SteelMint's weekly assessment.

Nickel three-month contract prices down

LME nickel three-month contract prices fell 5.85% to $25,669/t on 17 June as against $27,264/t on 10 June.

SteelMint's assessment for stainless steel 304 grade scrap was at INR 154,000/t ($1,975/t) exy-Delhi, up INR 3,000/t ($38/t), while grade 316 scrap was assessed at INR 238,000/t ($3,053/t) exy-Delhi, marginally up by INR 3,000/t ($38/t) w-o-w on 16 June.

Copper armature scrap prices fall 2% w-o-w

SteelMint's assessment for copper armature scrap stood at INR 693,000/t ($8,889/t) exy-Delhi yesterday, down by INR 15,400/t ($198/t) or 2.17% w-o-w.

LME three-month copper contract prices went down 5.14% to $8,962/t on 17 June as against $9,448/t on 10 June.

Domestic zinc prices trend lower

SteelMint's assessment for special high-grade (SHG) zinc ingots declined by INR 14,400/t ($185/t) to INR 324,000/t ($4,156/t) exw-Delhi on 17 June owing to weak exchange sentiments.

LME zinc three-month contract prices fell 4.57% to $3,524/t on 17 June as against $3,693/t on 10 June.

Moreover, primary zinc producer Hindustan Zinc Ltd (HZL) also decreased special high-grade (SHG) zinc ingot prices by INR 12,600/t ($162/t) this week to INR 331,400/t ($4,251/t).

LME lead prices down 4% w-o-w

LME lead three-month contract prices fell by 4% to $2,062/t on 17 June as against $2,148/t on 10 June.

Domestic lead remelted ingot (99%) were down by INR 1,000/t ($13/t) this week. However, primary lead ingot (99.99%) prices showed an upward trend on a weekly basis, up 1.7%. SteelMint assessed lead remelted ingot prices at INR 187,000/t ($2,399/t) and primary lead ingot prices at INR 205,000/t ($2,630/t) on 17 June.

As per market participants, there is no gap between supply and demand in the market. Thus, prices of lead ingot remained largely rangebound.

Global market scenario

Bangladesh's government has taken up a strategy in the budget to speed up development in various sectors of the economy. The country's finance minister A.H.M. Mustafa Kamal presented the budget last week for FY23. It was revealed that even during the Covid-19 pandemic, the GDP growth in FY21 was 6.94%.

At present, some local industries are producing high-quality stainless-steel products. To encourage the establishment of local backward linkages in heavy industry and ensure market competitiveness, the budget proposed to reduce the existing import duty from 10% to 5% on hot-rolled stainless steel sheets as raw material, SteelMint understands.