Lead markets in Delhi and Mumbai struggled as offers were lower amid stagnant demand and a drop in LME lead prices. Scrap and lead ingot prices decline in the week ending Sep 16 as smelters preferred to gauge the market before booking raw material.
The official three-month LME dipped slightly from the week prior by $13.5/mt or 0.69pc and settled at $1,938.5/mt on Tuesday from the prior week. Scrap prices in Delhi and Mumbai dipped by 0.62-1.3pc in a week while secondary lead ingot prices fell marginally by 0.4-0.5pc from the week prior.
In Delhi, demand slipped prompting scrap sellers to reduce offers to sell off the ample supply of scrap battery. The Davis Index for lead batteries (drained) in Delhi settled at Rs80,167/mt ($1,089/mt) del consumer down by Rs500/mt from the prior week. The Davis Index for lead batteries (drained) in Mumbai Wednesday dipped by Rs1,038/mt to settle at Rs80,500/mt del consumer amid thin trades. Smelters in the region are waiting for positive cues from the market before stocking inventories.
The market for scrap in Delhi was stronger than in Mumbai as spreads in Mumbai widened while for Delhi, spreads narrowed depicting a strengthened market compared to the prior week.
The Davis Index for secondary lead ingot in Mumbai fell by Rs750/mt and settled at Rs143,875/mt ex-works producer on Wednesday from the preceding week. Smelters are wary of the current situation and say that market is likely to fall in the coming week as demand from end-users has slightly fallen. Traders believe market can sway either ways, up or down. There is no doubt that demand grew gradually throughout August, however, many now believe it was pent-up demand from the lockdown period and in the absence of sustained demand, prices are likely to fall in the coming weeks.
The Davis Index for secondary lead ingot in Delhi fell by Rs583/mt and settled at Rs143,500/mt ex-works producer on Wednesday from the week prior. Markets for secondary lead ingots strengthened slightly compared to the prior week as spreads widened, however marginally. Domestic prices of secondary lead ingot fell 0.40-0.52pc in Delhi and Mumbai, respectively, while LME lead slipped 0.69pc in a week from the prior Tuesday.
Several factors including the rising number of COVID-19 cases, increase in global lead inventories and the negative forecast for the auto sector and infrastructure sector, point towards a weakening market and a drop in consumption of lead, going forward. Though, market participants expect strong demand from the industrial sector.