Weekly round-up: Domestic base metals prices defy global trends; Copper futures surge

After a two-week slump, LME base metals prices bounced back for the week ending on Friday, 16 February. Notably, copper prices witnessed a surge of 3.9%, likely due to a 4% drop in its inventories, suggesting potential scarcity.

Meanwhile, lead stocks saw a notable increase of over 17% to reach 177,575 t, with zinc following closely behind with a rise of over 16% to 264,825 t. Additionally, copper stocks dropped by over 4% to 130,675 t this week.

In LME, three-month aluminium futures increased by 0.09% to $2,218/tonne (t), while nickel settled at $16,356/t (up 2.7%). Copper prices were at $8,489/t (up 3.9%), zinc gained by 3.7% to $2,385/t and lead prices rose by 1.5% to $2,064/t.

In India, the non-ferrous sector defied global trend for the week. Both imported and domestic scrap prices gained while the primary market P1020 prices remained largely stable. Copper saw minor price fluctuations, but zinc and lead took a notable tumble.

Market trade activities for imported material remained moderate for the week, though concerns persisted about the increasing freight rates.

Aluminium

During the week, primary aluminium ingot (P1020) prices in the spot market remained largely stable, despite marginal price hikes by BALCO and Hindalco. However, NALCO's prices remained unchanged w-o-w.

Spot prices for aluminium ADC12 alloy ingots surged by INR 3,500/t w-o-w to INR 202,000/t exw Delhi, driven by a rise in local tense scrap prices amidst shortages. The scarcity of vital raw materials, especially tense scrap, led to soaring prices in the north Indian market, reaching INR 172,000/t exy Delhi.

The spread between tense and ADC12 currently stands at INR 31,000/t, but mills are aiming for a gap of INR 35,000/t. Producers are increasingly turning to substitutes like zorba and trump due to the shortage of tense scrap. ADC12 prices are expected to remain elevated, with producers awaiting the March price announcement from Maruti to determine new rates.

India's imported aluminium prices surged due to rising futures, limited availability, and increased demand. Aluminium scrap prices saw a $25-35/t increase weekly.

Copper

Domestic copper armature prices in Delhi rose by 0.5% w-o-w to INR 675,000/t and secondary CCR rods gained 0.4% to INR 715,000/t. Meanwhile, primary CC rods declined marginally by 0.8% to INR 732,000/t despite a gain in demand.

Coming to the future exchange market in India which is mostly influenced by MCX, where copper cathode prices experienced a 1.1% weekly rise and recorded at INR 723,000/t against INR 715,000/t for the February 2024 contract aligning with the domestic secondary market.

Despite a surge in freight post-Red Sea incident, market instability persisted in the imported segment leading to a 2.1% w-o-w decline in scrap prices further impacted by the weekly drop in LME futures as of 14 February 2024.

Zinc, lead