India: Zinc dross, oxide prices decline as LME inventories rise

• LME zinc 3-month price falls 0.7% w-o-w; inventories rise 16.4%
• Zinc dross, oxide and scrap prices decline on weakness in secondary market

India’s zinc dross and oxide prices declined in the week ended 22 October, amid falling three-month LME zinc prices and a sharp increase in exchange inventories. Zinc scrap prices also registered further declines, while domestic SHG zinc ingot prices remained broadly stable.

Three-month LME zinc declined by $25/t, or 0.7%, to $3,724/t on 21 October from $3,749/t on 14 October. The cash-settlement price fell by $32/t to $3,771/t from $3,803/t over the same period.

LME zinc inventories increased by 23,700 tonnes to 167,825 tonnes on 21 October from 144,125 tonnes a week earlier, marking a 16.4% rise. Meanwhile, the cash-to-three-month backwardation narrowed to $47/t from $54/t, indicating some easing in nearby supply tightness despite the continued premium for prompt metal.

Zinc dross, oxide prices decline

Domestic zinc dross prices declined by ₹5,000/t w-o-w to ₹345,700/t ex-Delhi on 22 October, compared with ₹350,700/t a week earlier. Zinc oxide (99% Zn) prices fell by ₹4,200/t to ₹330,000/t ex-Delhi from ₹334,200/t.

The decline in secondary zinc prices coincided with lower three-month LME zinc prices and rising exchange inventories. The correction was more pronounced in domestic dross and oxide assessments than in primary SHG zinc ingot prices, indicating continued weakness in the secondary market.

Zinc scrap prices decline further

In the north Indian zinc scrap market, big Tukdi (97-98% Zn) was assessed at around ₹342,000/t ex-Delhi, while mid-sized Tukdi (97-98% Zn) was assessed at around ₹337,000/t. Small Tukdi was assessed at around ₹327,000/t.

Scrap prices declined during the week, with big Tukdi falling by ₹5,000/t, mid-sized Tukdi by ₹6,000/t and small Tukdi by ₹7,000/t compared with the previous assessment. The steeper correction in smaller grades reflected the broader weakness across the secondary zinc market.

Domestic SHG zinc remains broadly stable

BigMint’s assessment of domestic SHG zinc ingot prices stood at ₹436,500/t ex-Delhi, up ₹500/t from ₹436,000/t in the previous assessment.

Meanwhile, Hindustan Zinc Ltd (HZL) raised its SHG zinc benchmark by ₹2,000/t to ₹400,300/t on 22 October from ₹398,300/t on 19 October. The increase in HZL’s benchmark contrasted with the decline in secondary zinc prices.

Outlook

Zinc dross and oxide prices may remain under pressure in the coming week, with rising LME inventories and lower three-month zinc prices weighing on market sentiment. Continued declines in zinc scrap prices also point to weakness across the secondary market.

However, the resilience in domestic SHG zinc ingot prices and the continued backwardation in the LME market may provide some support. Further price movements are likely to depend on primary zinc trends, inventory developments, nearby spreads and domestic demand.