Weekly round-up: Indian base metal market sees diverse patterns amid uptrend in LME prices

This week, there was an upward trend in the non-ferrous metals market on the London Metal Exchange (LME). Simultaneously, the domestic Indian market displayed diverse patterns, with trading activities ranging from low to moderate levels throughout the week.

Three-month aluminium futures on the LME inched up by 5.3% to $2,247/tonne (t), while nickel settled at $17,150/t (up 2%). Copper prices were at $8,549/t, while zinc gained by 5.5% to 2,532/t and lead prices were up by 2.8% to $2,081/t. The stocks at LME-registered warehouses witnessed outflow w-o-w by up to 4.1%.

The upswing on LME was mainly driven by optimistic sentiment following signals from the US Federal Reserve regarding interest rates. Notably, aluminium and zinc marked substantial w-o-w gains, supported by robust macroeconomic conditions in the United States and China.

In India, the non-ferrous metals market displayed a varied pattern of price movements during the week. Prices of imported aluminium experienced a decrease, while domestic scrap prices remained relatively stable. Copper prices showed a slight increase, whereas zinc saw modest gains and lead prices experienced marginal declines.

On the other hand, both domestic and imported trade activities persisted at a sluggish pace throughout the week, primarily due to the year-end slowdown. Sources suggest that the market is expected to attain more clarity after mid-January 2024.

Aluminium

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

Aluminium ADC12 alloy ingot prices held steady at INR 181,000/t. Domestic silicon 553 in the spot market was at INR 174,000-175,000/t. Major players adjusted production amid sluggish demand. One leading automaker set January's ADC12 settlement price at INR 191,000/t, up INR 2,000/t m-o-m.

The Indian imported aluminium scrap market faced a downturn amid reduced trading, winter accumulation in the west. Tense scrap from the Middle East was down by $20/t, while Zorba 95-5, UK-origin, increased by $90/t. Disparities in scrap prices range from $30-$40/t across grades. US scrap quotes at 53% of LME prices, and high exchange rates in Europe and the UK pose challenges.

Southern Indian mills report decreased production due to a cyclone, with plans to resume operations further. Snowfall in China affects material loading, raising silicon 553 prices by $20/t weekly to West Coast, India.

Despite a increase by major players, India's domestic aluminium scrap prices stayed within a narrow range due to restricted activities.

Copper

Copper prices in the domestic market experienced upward trend w-o-w. Market activity appeared slow with a few trades reported for the week.

On the other hand, SteelMint's assessment for copper mix motor scrap originating from the US witnessed a 2% drop w-o-w attributed to limited trading activity.

MCX copper prices saw a 0.1% w-o-w decline, falling from INR 725,000/t to INR 726,000/t. Meanwhile, copper prices on the COMEX market experienced a 2% rise, increasing from $8,425/t to $8,557/t compared to the previous week.

In FY 2022-23, India's copper import spending rose to INR 27,131 crore from INR 21,985 crore the previous year. This increase is due to India's reliance on imported copper ore and concentrate, driven by limited domestic reserves. India holds the 10th global rank in refined copper production at 5.55 lakh tonnes.

ICRA forecasts robust growth in India's refined copper demand at approximately 11% in both FY2024 and FY2025. This outpaces the global growth rate, driven by the government's emphasis on infrastructure development and a gradual shift to renewable energy in the country. Additionally, the imports of refined copper to India had increased by 30% in FY2023 and by 180% in H1 FY2024.

Zinc and lead

Zinc and lead prices remained range-bound, with zinc increasing slightly by 0.2%. Remelted lead prices fell by 1.8%, reflecting the 1% w-o-w downturn in HZL prices.

In the imported segment, Middle East-origin zinc diecast (5%) was assessed at $1,910/t, CIF Mundra, marking a 0.2% increase.

Recent deals

• Around 300 t of Birch Cliff clean, Middle East origin was traded at 91% of LME, CIF Mundra.
  
  
• 30 t of Aluminium Wheels originating from the US was traded at LME 3M (-$30), CIF Chennai.
  
  
• 10 t of Aluminium Tense was heard at INR 150,000/t, exw-Ahmedabad.
  
  
• A deal for 20 t of Copper Armature scrap was heard at INR 658,000/t, exw-Delhi.
  
  

Global updates

• India's industrial output grew by 11.7% y-o-y in October, surpassing expectations and marking the fastest pace in 16 months, fuelled by robust festive demand for electricity and durable goods during Diwali.
  
  
• Japan's copper strip production fell by 18% in H1 this fiscal year to 113,177 tonnes, per the Japan Copper Stretching Association.