Weekly round-up: Domestic, global base metals prices diverge; Lead stocks surge

Base metals prices on the London Metal Exchange (LME) remained on the lower side barring aluminium for the week closing on 22 March 2024. The drop in prices was attributed to increasing stocks except aluminium. Lead stocks witnessed the highest inflow among all the base metals. Lead inventories witnessed an inflow of over 40%, reaching 267,775 t from 190,575 t.

On the LME, three-month aluminium futures increased by 1.54% at $2,309/t, while nickel settled at $17,242/t (down 4.6%). Copper prices were at $8,866/t (down 2.2%), zinc fell 3% to $2,484/t and lead prices dipped by 4.3% to $2,036/t.

During this week, the domestic and global base metals market witnessed diverging trends except for aluminium. Both imported and domestic aluminum scrap markets maintained positive price levels. Copper and zinc domestic copper market witnessed a rise in prices. Meanwhile, lead market remained range-bound.

Aluminium

During the week, primary aluminium ingot (P1020) prices in the spot market rose amid price hikes by primary players.

Aluminium ADC12 alloy ingot prices rose marginally by INR 1,000/t to INR 208,000/t w-o-w in Delhi, driven by constrained casting scrap supply and overseas market trends. Manufacturers face challenges meeting demand amid supply chain disruptions, with expectations of further price hikes driven by major automobile companies. In the domestic aluminum market, tense scrap prices are currently trading at premiums of up to INR 185,000/t.

Indian imported aluminium scrap prices held steady. Supply constraints and geopolitical tensions contribute to rising prices. Freight rates show signs of reduction, easing some pressure. Demand remains moderate amid limited scrap inflow domestically.

Copper

Domestic copper armature prices surged to INR 712,000/t ex-Delhi, up 1.6% w-o-w. Secondary CCR rods rose to INR 758,000/t, a 1.6% increase, while primary CC rods reached INR 780,000/t, up 2.1% w-o-w. Futures markets show LME hitting 11-month highs, driving imported scrap prices up by 1.8%.

USA-origin talk scrap is offered at 53.5-54% of three-month LME futures, with actual trades occurring at 53.5%. BigMint assesses USA-origin talk scrap at $4,840/t, up $190/t w-o-w. Middle East-origin talk scrap, mainly from the UAE, is priced at $4,655/t, up $165/t w-o-w.

Zinc and lead

India's zinc and lead prices remained stable within narrow ranges, with market activity subdued ahead of the financial year-end and Holi holidays. Zinc ingot prices in Delhi decreased by 0.9% w-o-w to INR 226,000/t, influenced by a 1.3% reduction by HZL. Re-melted lead prices held steady at INR 179,000/t. Middle East zinc diecast (5%) prices were reported at $1,990/t CFR Mundra.

Global updates

As per the International Aluminium Institute (IAI), the aluminium production in Feb'24 has dipped, reaching 5.54 mnt, marking an 8% decrease from 6.03 mnt, m-o-m.

The Bank of Japan ends 8-year negative interest rates near zero due to economic fragility which shows confidence in Japan's recovery from deflation.

Japan's Marubeni Corporation recently secured a $2.5 billion loan to support the expansion of the Sentinella copper mine in Chile.

Chile's copper ore production dropped m-o-m by 24% to 100,6769 t in Feb'24.