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

Battery scrap prices are falling at a steeper rate compared to secondary lead ingots in India despite strong demand from smelters. Battery scrap prices trended down in the last three weeks while the prices of secondary lead ingots rose in the prior week, though these prices are lower than pre-lockdown levels. Healthy demand for ingots from battery manufacturers is pushing prices upwards, but scrap prices are falling contradicting market normality. It is not excess of scrap or low demand that is pulling scrap prices down but a disruption in the supply chain is hurting recyclers.


Scrap prices fell by approximately 8pc on June 10 to Rs76,950/mt from the prior week, while prices of ingots improved a percent to Rs135,200/mt. Lead ingot prices are expected to climb further said manufacturers while scrap is likely to fall in the near term. This places smelters in a good position in the market as it improves their margins, but no one is sure for how long this situation would last. Lower scrap prices reduce smelter’s input cost and while an uptick in demand from battery manufacturers are expected to hold ingots prices higher.  

Davis Index trend: Battery scrap Vs secondary lead ingots – The price of both battery scrap and secondary lead ingot moved in sync from January through the lockdown until June. But in June, we see a change in the pattern where ingots are heading northwards and battery scrap prices are declining. 


June is testing time for the scrap industry posing new challenges and trends. The COVID-19 pandemic has impacted prices, demand and disrupted supply chain. Battery scrap collection was hampered during the lockdown, but this did not result in a shortage of scrap which would have pushed prices upwards. June is a ‘turmoil’ situation said market participants as there is no correlation with the past or the future. Every day new things are taking place in the market fueling volatility. 


Scrap prices are pressured because battery shop owners that mostly sell old batteries to recyclers want to rid themselves of batteries due to lack of storage space. Taking advantage of this situation recyclers are collecting scrap at a discount. Market participants like traders and manufacturers are aware of the ample availability of scrap and are therefore not ready to pay high prices for scrap batteries leading to a drop in scrap prices. 


There is plenty of battery scrap to be collected post-lockdown as many batteries might have discharged during the no-use phase. This is also reviving the demand for new batteries in the markets. 


Lack of labour to collect and process battery scrap is also pushing scrap prices lower. Furthermore, the dismantling of batteries is termed ‘dirty’ and is a tedious job which most smelters avoid and prefer to buy ‘clean’ battery scrap. 


In June, battery manufacturers curtailed production capacity to 30-50pc on low availability of labour. Similarly, secondary lead ingot manufacturers have also cut production by 40-50pc. This has resulted in market prices to level-off. Currently, for secondary lead ingots, demand and supply are quite in equilibrium. There is also fear of a second wave of the pandemic. The replacement market is also running at 50pc capacity. If COVID-19 fear elevates, market sentiments will be affected which will push demand lower and sway lead market growth/capacity lower than 50pc. New battery sales is down from the year prior by 50pc but there is a lot of replacement happening as vehicles were idled for more than two months. Old imports of secondary lead ingots which were booked in February and March is being sold in May and June which is boosting demand and price of ingots, domestically.


End-user industrial sectors for batteries, mainly telecom, look stressed. Improvement in the telecom sector will support demand for lead and return the lead scrap market to pre-pandemic levels. As urban areas still face restrictions, but demand is expected to improve in the rural segment as they have better liquidity and are the ones that buy old cars and tractors which require new batteries for them. It is the rural segment which will kick start demand.


In various cities, smelters are facing a scarcity of scrap, especially in Mumbai, due to restrictions on scrap vendors located in containment areas. Another factor influencing scrap prices is the collection of scrap at below-market rates by unorganised market players. They buy at rates below the official market prices set by scrap associations and operate without bills. These practices are impacting both the availability and the price of scrap for organised recyclers and smelters. 


As LME Lead is on an uptrend, smelters cannot sell at bids lower than market prices. Smelters are offering around Rs135,000/mt ex-works Mumbai and Rs134,000/mt in South India. LME is up to $108/mt to $1,711/mt on June 11 from May 20, since trading resumed in India. Price direction will be clearer as we near July and overcome the operational difficulties in June, said sources. 

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