- Domestic secondary prices track higher primary zinc values
- Backwardation widens as near-term supply remains relatively tight
India’s zinc dross and oxide prices increased w-o-w in the week ended 9 September, tracking higher domestic primary zinc and stronger international zinc prices. Secondary zinc prices continued to firm as elevated replacement costs provided support, while LME zinc recovered despite a sharp increase in exchange inventories.
Three-month LME zinc increased by $159/t, or 4.1%, w-o-w to $4,036/t on 9 September from $3,877/t on 2 September. The cash-settlement price rose by $186/t to $4,186/t.
The cash-to-three-month backwardation widened to $150/t from $123/t a week earlier, indicating relatively tighter nearby availability despite the rise in exchange stocks. Meanwhile, LME inventories increased by 15,150 t to 115,675 t, continuing their upward trend after crossing the 100,000-t mark last week.
Zinc dross, oxide prices rise
Domestic zinc dross prices increased by INR 8,200/t w-o-w to INR 357,500/t ex-Delhi on 9 September, compared with INR 349,300/t a week earlier.
Zinc oxide (99% Zn) prices also rose by INR 10,800/t w-o-w to INR 340,800/t ex-Delhi from INR 330,000/t.
The increase in secondary zinc prices was supported by stronger primary zinc replacement costs, with domestic SHG values rising alongside the recovery in LME zinc. The sharper increase in oxide prices compared with dross indicates continued firming across the secondary zinc market.
Zinc scrap prices edge higher
In the north Indian zinc scrap market, big Tukdi (97-98% Zn) was heard at around INR 353,000/t ex-Delhi, up INR 3,000/t w-o-w from INR 350,000/t.
Mid-sized Tukdi (97-98% Zn) was also reported at around INR 348,000/t, increasing by INR 3,000/t from the previous week.
The increase in Tukdi prices, alongside higher dross and oxide values, indicates a broader firming trend in the domestic secondary zinc market. However, the relatively smaller increase in scrap prices compared with dross and oxide suggests that the rise in primary zinc has been transmitted more strongly into processed secondary material.
Domestic SHG zinc rises
BigMint’s domestic SHG zinc assessment stood at INR 436,000/t ex-Delhi on 9 September, up INR 11,200/t from INR 424,800/t on 2 September.
The increase broadly tracked stronger LME zinc prices and higher replacement costs. Domestic primary zinc values have moved higher after the correction seen at the beginning of September, providing additional support to secondary zinc prices.
The latest domestic SHG level also remains above the INR 429,500/t benchmark heard from Hindustan Zinc on 3 September, indicating continued firmness in the domestic primary zinc market.
The movement in LME inventories and backwardation will remain important indicators for the secondary market. Although inventories have risen significantly to 115,675 t, the widening backwardation suggests that near-term supply conditions remain relatively tight. The combination of stronger prices and higher stocks therefore presents mixed signals for the primary and secondary markets.
Outlook
Zinc dross and oxide prices may remain supported in the coming week if domestic SHG zinc sustains current levels and international zinc prices remain firm.
The recovery in LME zinc and widening cash-to-three-month backwardation provide support to replacement costs, while higher domestic primary zinc values are likely to keep secondary offers elevated.
However, the sharp increase in LME inventories to above 115,000 t could limit further upside if stocks continue to build or international prices weaken. Further gains in zinc dross and oxide prices are therefore likely to depend on the sustainability of primary zinc prices and the extent to which higher replacement costs are absorbed by the secondary market.
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