Weekly round-up: Non-ferrous market slumps amid falling futures w-o-w

Non-ferrous metals prices on the London Metal Exchange (LME) witnessed a downfall w-o-w. The market moved on a slow pace this week nearing the end of May. However, it is expected to gain momentum in the upcoming weeks.

Stocks of all key non-ferrous metals like aluminum, copper, zinc and lead increased. However, nickel recorded a downtrend of 1.2% at LME-registered warehouses. Notably, stocks of zinc had gained drastically by 58.7% to 74,550 tonnes (t).

The dollar index, which measures the greenback's value against a basket of six different currencies, was at 104.23, up 1.01% compared to the last week.

Global market: South Africa raises rates amid inflation

South Africa's central bank raised its benchmark interest rate to a 14-year high, aiming to rein in inflation sustainably. This marked the tenth consecutive rate hike, with the rate increasing by half a percentage point to 8.25%. The decision led to a drop in the value of the rand against the dollar.

Persistent price pressures, coupled with energy supply issues and record blackouts, have contributed to the challenging economic situation. Inflation, although dropping in April, is expected to average 6.2% this year, with food prices remaining high. Policymakers globally are grappling with an elevated inflation due to factors such as rising energy and food prices caused by the Ukraine conflict.

Domestic market overview

The domestic non-ferrous scrap market had mostly observed a dip this week due to falling future exchange markets and an uncertainty from various factors. Transactional activities continued to remain moderate. However, the demand was weak. Moreover, sellers are hoping for prices to rise in the near-term.

Aluminium scrap trade continues to remain moderate w-o-w

Aluminium scrap prices in the domestic market mostly remained stable in the beginning of the week and depicted a slow rising trend towards the end. Additionally, price revisions by primary players did not have any major impact on the domestic scrap market. As a result, sellers have become increasingly cautious, adopting a wait-and-watch approach to assess the situation.

When assessing the availability of scrap in local markets, the situation turned out to be increasingly complex, with significant variations seen between regions.

Tense prices stood at INR 163,000/t while utensil prices were at INR 174,000/t exy Delhi.

Domestic aluminium alloy ingot ADC12 prices fell by INR 3,000/t w-o-w to INR 196,000/t exw-Faridabad this week. The market saw lesser transactions owing to low demand which kept prices down. Currently, downstream industries, including die casting units and automotive manufacturing, are experiencing a period of underperformance. This downtrend can be observed in different regions.

Global aluminum market

In recent times, prices of imported aluminium scrap in India have encountered considerable fluctuations. Certain grades of aluminium scrap witnessed a noteworthy rise by up to $55/t during this week. However, there were specific grades that experienced a decline by up to $30/t compared to the previous week.

Trading activity remained lower than usual, creating an atmosphere of uncertainty in the market sentiment. The absence of substantial trades caused confusion among participants, as medium-scale buyers refrained from placing firm bids. Consequently, assessing the market direction became a challenging task for industry players.

Copper prices down w-o-w

Domestic copper armature scrap prices dropped w-o-w to INR 674,000/t ($8,163/t) ex-Delhi. Meanwhile, secondary wire rod prices stood at INR 708,000/t ($8,575/t) ex-Delhi.

An ongoing shortage of copper scrap material in northern India was noticed increasing the cost d-o-d. Prices were down w-o-w due to falling futures. However, secondary rods are experiencing higher demand in the market.

Uncertainty in the domestic market prices persists due to the highly volatile London Metal Exchange (LME). However, a slow recovery has started and is expected to continue in the near future. Furthermore, various reports have surfaced highlighting shortages in certain regions during the assessment of material availability in local markets. These reports have the potential to trigger an upswing in prices.

Zinc and lead prices fall

Prices of domestic special high-grade (SHG) zinc ingots fell by 6.5% w-o-w to close at INR 215,000/t ($2,603/t) exw-Delhi amid slow zinc futures. Similarly, prices of domestic remelted lead ingots dipped by 0.5% to INR 182,500/t. Primary lead ingots prices stood around INR 204,000/t, exw-Delhi.