Weekly round-up: China starts aluminium exports, scrap import prices surge

China started exports of primary aluminium in the first two months of the current calendar to feed the demand and supply gap in western markets which are witnessing production cuts due to higher power tariffs.

Aluminium

Over the curent week, LME cash prices of aluminium were down by $123/t to $3,483/t on 1 April, 2022 as compared to $3,606/t at the beginning of this week. Another concern is dipping stocks, which fell 5% to 635,975 tonnes (t) w-o-w on the LME-registered warehouses.

Price correction w-o-w from Indian primary producers

Hindalco and Balco corrected downward primary aluminium ingots (P1020, 99.7%) prices by INR 3,000-4,000/t, exw-Delhi.

During the week, limited transactions were recorded in the domestic aluminium scrap market owing to the financial year ending amid a tight payment cycle. Most of the scrap grades saw minor corrections of INR 2,000/t except for one, which remained range-bound in northern India, on a w-o-w basis.

Market participants anticipated that regular trade would begin from the new financial year of 1 April, 2022 but buying sentiment has still not caught up as the payment cycle is yet to ease, and new orders are not so forthcoming, trade sources
said.

Further, aluminium scrap import prices, CIF Nhava Sheva, saw adequate increase, moving up by up to $90/t w-o-w on 29 March, 2022. Overall, import prices rose by $30-90$/t following a strong LME 3-month trading session. However, minor corrections were observed during the closing of the last assessment schedule.

Nickel

Prices of nickel on LME were seen stable this week. Three-month prices were seen rising marginally by 1-2% to $33,223/t towards the end of the week. The 3-month prices are on the higher side as market participants believe that prices might go up further due to
high demand. The stocks of nickel were seen at 72,390 t yesterday, down by 426 t against the weekly opening level.

The impact of LME is also reflected in domestic stainless steel prices. 316 scrap increased by INR 13,000/t ($171/t) on 31 March, 2022 as against 29 March, 2022. The 304 scrap price remained at around INR 189,000/t ($2,488/t) exy-Delhi.

LME support, tight scrap supply and strong demand turned market sentiments bullish as per sources. "There is limited scrap supply in the domestic market and demand from north Indian mills from last week surged due to higher import prices," one trader said.

Copper

Despite the fall in aluminium and nickel prices, copper has shown somewhat stability in both cash and 3-month contract prices. The cash price was at $10,200/t-10,250/t and the 3-month contract prices hovered at around $10,300/t- $10400/t for the whole week.

However, copper inventory was recorded at 93,975 t, up sharply by 17% from 80,550 t on Monday.

Zinc

The zinc market has shown mixed sentiments. The cash price was $4,332/t, up by $268/t as against $4,064/t a week ago, whereas the 3-month prices were at $4,339/t up by $252/t as against monday, but the volumes of stocks have come down to $139,950 t. The reason behind the continuous hike in prices was the supply shortage in the domestic market and impact of the lockdown in China which has made market participants dependent on Indian sourcing for their requirements.