- LME zinc 3-month climbs 5% amid tight nearby availability
- Zinc oxide bucks trend, with INR 1,000/t drop w-o-w
India’s zinc dross and zinc scrap prices increased w-o-w in the week ended 26 August 2026, supported by a sharp rise in primary zinc prices and higher replacement costs. LME zinc extended its rally to a four-year high, while the cash market remained in strong backwardation, signalling tight nearby availability.
Three-month LME zinc rose to $3,933/t on 26 August from $3,743/t on 20 August, gaining $190/t or 5.1% w-o-w. The cash-settlement price reached $4,107/t, creating a $174/t premium over three-month zinc. LME stocks increased to 97,325 t from 94,400 t over the same period, but remained below 100,000 t.
Zinc dross, oxide show mixed movement
Domestic zinc dross prices increased by INR 2,400/t w-o-w to INR 340,200/t ex-Delhi on 26 August, from INR 337,800/t previously.
Zinc oxide (99% Zn) prices, however, eased by INR 1,000/t w-o-w to INR 324,800/t ex-Delhi, compared with INR 325,800/t a week earlier.
The divergent movement suggests that the primary zinc rally has been transmitted more strongly into dross and scrap replacement costs than into oxide pricing. Sellers of dross continued to revise offers higher, while oxide buyers appeared more resistant to elevated prices.
Zinc scrap prices strengthen
In the north Indian zinc scrap market, big Tukdi (97-98% Zn) was heard at around INR 350,000/t ex-Delhi, up from around INR 342,000/t previously.
Regular Tukdi (97-98% Zn) was reported at around INR 345,000/t, compared with INR 337,000-338,000/t a week earlier.
Small-sized Tukdi was heard at around INR 335,000/t, broadly stable from INR 335,000-336,000/t previously.
The stronger gains in big and regular Tukdi indicate that higher replacement costs are feeding into higher-grade scrap more quickly. However, the stability in small Tukdi suggests that downstream buying capacity remains a constraint and that not all grades are able to fully absorb the primary-market rally.
Domestic SHG zinc jumps 6%
Domestic SHG zinc prices climbed to INR 426,000/t ex-Delhi on 26 August from INR 403,000/t on 19 August, gaining INR 23,000/t or 5.7% w-o-w.
The domestic benchmark broadly tracked the international rally, with LME zinc rising 5.1% over the same period. This sharp increase has materially lifted replacement costs for secondary zinc consumers and strengthened seller price expectations.
However, the relatively modest rise in dross and the decline in oxide compared with the 5.7% increase in SHG zinc show that secondary prices are lagging the primary market rather than fully repricing immediately. This could leave room for further adjustments if LME zinc remains above $3,900/t.
The international market remains sensitive to regional supply tightness. LME zinc inventories have been on a downtrend even as stocks build in China, creating a regional imbalance that has contributed to the strong rally.
Outlook
Zinc dross and higher-grade scrap prices are likely to remain firm-to-positive in the near term as domestic SHG zinc stays elevated and LME zinc trades near $4,000/t. The $174/t cash-to-three-month backwardation on 26 August is a strong indicator that nearby physical availability remains tight.
However, the rise in LME stocks to 97,325 t is an early sign of improving availability and will be important to monitor. If stocks continue to build and the international rally loses momentum, secondary zinc prices could face resistance.
For the domestic market, the key risk is demand absorption. Dross and larger scrap grades have room to catch up with the sharp rise in SHG zinc, but subdued downstream buying could limit the pace. Overall, the market is likely to remain supported, with gradual upward movement more probable than another sharp jump, unless LME stocks reverse lower or the cash premium widens further.
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