Lead scrap prices in Delhi and Mumbai lost gains in the week ending Sept 9 after climbing for five straight weeks. Lead ingot prices in Delhi fell the previous week, ending a six-week upward trend and continued to dip this week too. In Mumbai too, ingot prices fell after rising for four weeks.
The primary cause for a fall in scrap and ingot prices could be attributed to LME lead losing steam. The official three-month LME lead contract fell by $57/mt and settled at $1,952/mt on Tuesday from the previous week, pulling down domestic scrap and ingot prices with it.
Mumbai
The weekly Davis Index for lead batteries (drained) in Mumbai settled at Rs81,538/mt ($1,108.46/mt) del consumer, down by Rs4,087/mt on Wednesday. Dip in LME prices pushed offers lower amid an oversupply of scrap. Demand from smelters was lower, which also resulted in low trades and transactions at lower price level. The weekly Davis Index for secondary lead ingot in Mumbai Wednesday settled at Rs144,625/mt ex-works producer, down by Rs4,875/mt. Demand has not fallen from battery makers, said smelters but it is a temporary break in orders from battery makers, who ramped-up production last month and are waiting to retail it.
The Mumbai market for scrap weakened as spreads expanded by 2pc from the previous week with domestic prices tumbling by almost 5pc on Wednesday from the week prior. Similarly, the market for secondary lead ingot in Mumbai weakened with spreads narrowing by 1.11pc from the previous week. LME lead fell by 2.84pc while domestic ingot prices slipped 3.26pc in the same period.
Delhi
The Davis Index for lead batteries (drained) in Delhi settled at Rs80,667/mt del consumer down by Rs1,833/mt on Wednesday from the preceding week. Market participants believe that domestic market offered an arbitrage in the past week. Though there are uncertainties around demand, it is not expected to go down steeply. The Davis Index for secondary lead ingot in Delhi Wednesday settled at Rs144,083/mt ex-works producer, down by Rs730/mt from the previous week.
The market for scrap in Delhi remained firm with spreads flat from the previous week despite a fall in domestic prices by 2pc but LME dipped by almost 3pc. Similarly, Delhi market for secondary lead ingot emerged stronger with spread widening by 1.7pc despite prices falling marginally. Delhi market is stronger for both scrap and ingots in terms of spreads compared to Mumbai.
Market participants believe that the post-COVID high demand may have been the pent-up demand, not a fresh one. If this speculation is true, then market may witness a sluggish period in the coming weeks. Festive demand may support automotive market but rise in COVID-19 cases and worsening economic parameters can be hurdles pausing demand for lead.
($1=Rs73.56)