India: HZL cuts zinc, lead offers as domestic prices ease amid softer global market

• Despite cut, HZL’s prices remain elevated amid last week’s sharp rally
• LME zinc backwardation narrows as inventories rise above 100,000 t

Hindustan Zinc Ltd (HZL) reduced its benchmark zinc ingot price by INR 4,900/t on 3 September, taking its Special High-Grade (SHG) zinc benchmark to INR 429,500/t. The company also reduced its lead benchmark by INR 1,200/t to INR 213,400/t.

Zinc benchmark eases amid softer domestic prices

BigMint assessed SHG zinc at INR 424,800/t ex-Delhi on 2 September, down INR 3,600/t d-o-d. The latest correction in HZL’s benchmark reflects easing domestic sentiment following a correction in international zinc prices and rising exchange inventories.

HZL’s zinc benchmark has declined by INR 4,900/t from INR 434,400/t on 31 August. Despite the latest reduction, domestic primary zinc prices remain elevated compared with levels seen before last week’s sharp rally, continuing to influence replacement costs across the secondary zinc market.

LME zinc declines as inventories cross 100,000 t

Three-month LME zinc declined to $3,877/t on 2 September from $3,933/t on 26 August, down $56/t, or 1.4%, over the period. The cash-settlement price also fell by $107/t to $4,000/t.

The cash-to-three-month backwardation narrowed to $123/t from $174/t a week earlier, indicating comparatively easing nearby supply tightness.

Meanwhile, LME zinc inventories increased by 3,200 t to 100,525 t, crossing the 100,000-t mark. The rise in stocks and narrowing backwardation signal improved exchange availability and have added pressure to zinc prices following last week’s sharp rally.

Lead benchmark also moves lower

HZL reduced its lead benchmark by INR 1,200/t to INR 213,400/t on 3 September, compared with INR 214,600/t on 31 August.

The decline in HZL’s lead offer suggests comparatively softer domestic sentiment. However, the smaller absolute movement in lead prices compared with zinc indicates that the domestic lead market remains relatively more balanced.

Outlook

HZL’s latest price reduction reflects the correction in international zinc prices and easing signs in the physical market. Rising LME inventories above 100,000 t and the narrowing cash-to-three-month backwardation indicate that immediate supply tightness has eased compared with the previous week.

However, domestic primary zinc prices remain elevated despite the recent correction, which could continue to support replacement costs in the secondary market.

Going forward, further movement in HZL’s zinc offers will depend on whether LME prices stabilise at current levels and whether the recent increase in exchange inventories continues. For lead, domestic price direction is likely to remain dependent on broader physical demand and international market developments.