Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The global secondary lead’s output is on uptrend with China ramping-up production but environmental compliance remains a big issue for China, said Vijay Pareek, Executive Director of Gravita India, a leading lead producer and recycler. He was speaking at a web conference held by MRAI and MCX on Dec 9 to discuss secondary lead market.


Issues raised by industry experts during the webinar include challenges faced by the secondary lead industry like – 

-Lack of transparent pricing

-Non-availability of benchmark prices and unpredictable metal prices 

-Inability to cover risk exposure 

-High cost of hedging on platforms like LME

-Scattered availability of raw material/scrap

-Environmental challenges

-Lack of skilled manpower while only unskilled labour is available


Demand uptick 

Demand for lead comes from auto sector in the form of lead acid battery, which is the biggest consumer of secondary lead. More than 75pc of Indian lead is being used in production of lead acid batteries. Telecom, railways, e-mobility and renewable energy have see green shoots for secondary lead demand, said Dhaval Shah, director of Metco, an indenting and metal trading house. Pareek said consumption of lead will increase further with the Telecom industry trying to spread into rural India.


Primary vs Secondary 

Production of secondary lead has always been more than primary lead. The gap has only increased over the years with secondary lead production up 18pc in 2018 from 2013 levels and primary lead production down 12pc in the same period, according to data provided by Pareek. 


Shah said the secondary lead industry has faced tremendous challenges posed by the pandemic that helped it emerge stronger. He added that the industry needs to have a price risk management system. Indian market participants should be able to offset the price volatility in the future, he noted. 


Indian battery consumption

Consumption of lead ingots has increased sharply in India, said S. Ramachandra, former VP of Amara Raja Batteries, who believes that demand has increased on the back of high consumption from OEMs and government sectors. He further said that India has expanded its battery production to meet the global needs. Indian batteries are sought in Dubai and Singapore as they are of better quality than those produced in Taiwan, China and Korea, he informed. 


Pricing system 

India does not have a single pricing method with regional markets setting prices through local trading. The basis of price settlement is not transparent, said Ramachandra. The prices are based on spot negotiations on a day-to-day basis. The unofficial ‘SMS’ pricing has become the pricing mechanism for Delhi markets, he added.


Prices globally are dynamic in sync with currency fluctuations which is fuelling volatility in India. Global prices fell to its lowest this year in May to around $1,650/mt but five months on, we see a turnaround and global prices are at $2,100/mt, trading at the higher end till date. This shows that market demand has improved with lower inventory levels globally for primary lead.

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