- Need-based buying dominates aluminium scrap trade
- Supply concerns cap downside in scrap prices
India’s imported aluminium scrap prices fell sharply w-o-w, pressured by weaker LME aluminium prices and sluggish demand from domestic buyers.
According to BigMint’s latest assessment for CFR Nhava Sheva deliveries, UK-origin zorba 95-5 scrap prices declined by $135/t w-o-w to $2,750/t, while US-origin tense 6-7% scrap prices dropped by $140/t w-o-w to $2,525/t, as subdued buying interest and bearish global market sentiment continued to weigh on import prices.
LME aluminium tumbles w-o-w
Three-month aluminium prices on the London Metal Exchange (LME) traded lower w-o-w, closing at $3,091/t on 30 June against $3,271/t on 23 June, down by $180/t or 5.5% w-o-w.
Meanwhile, LME aluminium inventories declined by 6,500 t, or 2.1% w-o-w, to 305,225 t on 30 June from 311,725 t on 23 June, indicating continued destocking across LME warehouses.
LME aluminium prices declined w-o-w as easing geopolitical tensions in the Middle East reduced the supply risk premium that had supported prices in recent weeks. Improving expectations for aluminium shipments from key Gulf producers, coupled with a stronger US dollar, weighed on investor sentiment and triggered profit-booking, pushing the three-month contract to its lowest level in nearly three months.
Market scenario
Imported aluminium scrap prices continued to trend lower this week, mirroring the decline in domestic scrap values as weakening LME aluminium prices weighed on market sentiment. The correction in the primary aluminium market followed the easing of geopolitical tensions after the US-Iran deal, coupled with an improved global supply outlook, prompting buyers to adopt a cautious approach.
Market activity remained largely need based, with participants refraining from building inventories amid expectations of further price corrections. Despite the overall weakness in prices, market sources indicated that the availability of certain scrap grades remains tight, suggesting that supply constraints persist in specific segments.
In the near term, imported scrap prices are expected to witness only a modest correction, tracking movements in the primary aluminium market. However, the medium to long term outlook remains supportive due to emerging supply-side risks from key exporting regions.
The UAE has already imposed a four-month ban on exports of selected ferrous, aluminium and copper scrap as part of its strategy to retain recyclable raw materials for domestic processing and downstream manufacturing. Although the UAE accounts for only around 6% of India’s aluminium scrap imports, it remains a strategically important supplier owing to its geographical proximity, competitive freight costs and shorter transit times. Any prolonged restrictions could therefore tighten regional scrap availability.
A more significant development is unfolding in Europe, which accounts for nearly 20% of India’s aluminium scrap imports. Earlier this year, the European Commission postponed its proposal to restrict aluminium scrap exports until September 2026 to allow further consultations among industry stakeholders. However, recent market reports suggest that the European Union is now preparing to introduce a 15% levy on aluminium scrap exports, with the proposal expected to be presented on 9 September. If approved by EU member states, it would mark the first time the bloc has imposed a charge on aluminium scrap exports, reflecting its broader objective of retaining secondary raw materials to strengthen domestic recycling and downstream manufacturing.
While these measures are yet to be finalised, they have already influenced market sentiment. The prospect of tighter scrap availability from two strategically important sourcing regions is expected to limit the downside in imported scrap prices. Consequently, although prices may remain under pressure in the short term due to weaker LME aluminium, any correction is likely to be moderate. Looking ahead, market participants are expected to closely monitor policy developments in the EU, as a formal decision in September could tighten global scrap availability and provide renewed support to aluminium scrap and secondary alloy prices.
On the domestic front, trading activity also weakened. Following softer global aluminium prices, the domestic market witnessed a notable decline, particularly in casting-grade aluminium scrap prices, which fell sharply w-o-w across both southern and northern regions amid weak demand and cautious buying sentiment.
Chinese silicon prices
According to BigMint’s latest assessment, China-origin Silicon Metal 553 prices declined by $65/t w-o-w to $1,370/t CFR Mundra from $1,435/t, as softer Chinese export offers amid weak downstream demand from the polysilicon and aluminium alloy sectors, coupled with comfortable supply availability, weighed on the market.
Outlook
Imported aluminium scrap prices are expected to remain under pressure in the near term, tracking LME aluminium and weak buying interest. However, limited availability of certain scrap grades and potential export restrictions from the EU and UAE are likely to cushion further downside, while domestic trading is expected to remain subdued with purchases largely confined to immediate requirements.
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