OEMs in the automobile sector record M-o-M growth in ADC12 aluminium ingot prices

Original equipment manufacturers (OEMs) in the automobile sector saw M-o-M surge in aluminium ADC12 alloy ingot prices, climbing by INR 6,000 per tonne to reach INR 204,000 per tonne, excluding GST, at the ex-works (exw) Delhi rate. Meanwhile, spot prices for ADC12 alloy ingots increased by INR 1,500 per tonne week-over-week, reaching INR 198,500 per tonne, excluding GST.

What's driving up costs?

In the north Indian market, the shortage of raw materials, specifically tense scrap, has led to elevated prices, with tense scrap currently priced at INR 167,000-168,000 per tonne exy Delhi, excluding GST. India's largest automobile manufacturer and the price settler in the domestic aluminium alloy ingot space announced its monthly aluminium alloy ingot ADC12 settlement prices at INR 199,500 per tonne for February 2024, up by INR 8,500 per tonne m-o-m. Prices have risen to a five-month high since September 2023, which has been absorbed in the market this week, data maintained by BigMint revealed.

Market Commentary

Shifting the focus to the raw materials scenario in Chennai, there is a notable scarcity, and the present level hovers up to INR 165,000 per tonne, exy Chennai, excluding GST, reliable sources shared with BigMint.

The western region needs more aluminium scrap material, impacting industries reliant on recycled aluminium. Increased demand, supply chain disruptions, and geopolitical factors contributed to this scarcity, posing challenges for businesses dependent on sustainable sourcing shared by one of the established players based in northern India.

The consistent surge in aluminium scrap prices can be attributed to skyrocketing freight charges caused by the Red Sea issue. Disruptions in shipping routes affected the supply chain, while the Middle East, particularly the UAE region, is not providing sufficient material. This combination of logistical challenges and reduced availability intensified market pressures, driving prices higher shared by other manufacturers,

A manufacturer of small to medium-scale aluminium alloy ingots has conveyed that they have already secured bookings for future orders up to a specific timeframe. This strategic decision is a response to a significant shortage of the essential raw material, namely casting scrap, BigMint noted.

Imported tense scrap prices from the Middle East, particularly from the UAE, fell by $20 per tonne to $1,700 per tonne yesterday. Tense (6-7 per cent) from the US was heard at $1,760 per tonne, down by $15 per tonne. Zorba 95-5 from the UK stood at $1,960 per tonne, down $25 per tonne w-o-w.

However, three-month futures for aluminium were currently at $2,227 per tonne, reflecting a weekly decrease of approximately $50-60 per tonne. China-origin silicon 553 prices were around $2,070 per tonne CIF Mundra, down $40 per tonne. Silicon prices are anticipated to remain stable from this week until 16 February due to the Lunar New Year.

Domestic market

In the domestic space, scarcity of raw materials, particularly tense scrap, has kept prices on the higher side. Tense scrap prices are at INR 166,000/t, while taint tabor scrap prices are at INR 167,000 per tonne exy-Delhi (excluding GST). Around 20 t tense scrap was heard sold at INR 166,000 per tonne ex Ahmedabad.

Recent deals

Around 40 tonnes ADC12 was traded at INR 198,000 per tonne with 30 days of credit payment terms Ex Delhi NCR. Around 600 t USA-origin aluminium zorba 95/5 was traded at $1,950 per tonne CIF West Coast India. Around 250 tonnes USA origin taint tabor HRB 3 per cent was traded at $1,770 per tonne CIF West coast India.

Sourced from SteelMint under the content exchange agreement