India: HZL cuts zinc, lead offers further as global market remains volatile

• HZL reduces zinc benchmark by INR 4,400/t, lead by INR 1,600/t
• Zinc prices remain elevated despite recent corrections in LME, MCX

Hindustan Zinc Ltd (HZL) reduced its benchmark zinc ingot price by INR 4,400/t on 7 September, taking its Special High-Grade (SHG) zinc benchmark to INR 425,100/t. The company also cut its lead benchmark by INR 1,600/t to INR 211,800/t.

The latest revision follows HZL’s previous price reduction on 3 September and reflects continued volatility in domestic and international metal markets.

HZL zinc benchmark declines further

HZL’s SHG zinc benchmark has declined by INR 9,300/t since 31 August, when the company had raised its offer to INR 434,400/t amid the sharp rally in international zinc prices.

BigMint assessed zinc special high grade ingots at INR 428,000/t ex-Delhi on 4 September. While domestic prices have eased from the highs witnessed during last week’s rally, the market continues to remain elevated compared with levels seen before the sharp uptrend.

The latest reduction in HZL’s offer could provide some relief to domestic buyers and secondary market participants, although replacement costs remain relatively high.

LME zinc remains volatile as inventories rise

LME zinc continued to witness significant volatility last week. The three-month LME zinc price recovered to $3,930/t on 4 September from $3,877/t on 2 September, while the cash price increased to $4,087/t.

The cash-to-three-month backwardation stood at around $157/t on 4 September, indicating that nearby supply tightness persisted despite the recent rise in exchange inventories.

Meanwhile, LME zinc inventories increased to 112,175 t on 4 September, compared with 100,525 t on 2 September. The continued stock build indicates improving exchange availability and could limit further upside in zinc prices if inventory additions continue.

During intraday trading on 7 September, LME zinc was at around $3,978/t at 13:30 IST, up 0.98%.

Lead benchmark also moves lower

HZL reduced its lead benchmark to INR 211,800/t on 7 September from INR 213,400/t on 3 September.

The benchmark has now declined by INR 2,800/t since 31 August, reflecting softer sentiment in the domestic lead market.

On the international front, three-month LME lead was at $1,914/t on 4 September, while exchange inventories stood at 391,975 t, declining from 404,675 t on 1 September. LME lead was quoted around $1,914/t during intraday trading on 7 September.

Outlook

HZL’s latest price revision reflects the moderation in domestic metal prices following last week’s sharp rally. The increase in LME zinc inventories above 110,000 t could ease concerns surrounding immediate exchange supply availability.

However, zinc prices remain relatively elevated, while the cash-to-three-month backwardation continues to indicate tightness in the nearby market. Going forward, the direction of HZL’s offers will depend on the sustainability of LME zinc prices, further inventory movements and domestic demand conditions.

For lead, the softer HZL benchmark suggests easing domestic sentiment, although declining LME inventories could provide some support to international prices.