Lead prices on Wednesday moved higher in comparison to the previous week, marginally in Delhi but by over Rs1,000/mt in Mumbai. Domestic prices have increased despite a drop in LME lead contract prices. The official LME lead three-month contract fell by almost $61/mt or down 2.86pc from the prior week to settle at $2,086/mt on Tuesday.
The weekly Davis Index for lead batteries (drained) in Mumbai, Wednesday, settled at Rs94,250/mt ($1,288/mt) del Mumbai consumer, up by Rs1,150/mt amid firm demand. The market for the grade strengthened in terms of spreads which contracted for the price index by 1.82pc from the previous week. The index climbed almost 1.24pc in a week. Prices should have fallen in line with the LME prices, but domestic demand was firm for scrap batteries and secondary lead ingots.
The Davis Index for secondary lead ingot on Wednesday settled at Rs157,583/mt ex-works producer, up by Rs1,683/mt from the week prior. The market for the grade strengthened in terms of spread as it widened by 2.10pc from the previous week for the price index. Demand for ingots from battery manufacturers is seasonally higher in summer but this year demand has remained stable without a significant increase.
Prices in Mumbai rose more than Delhi on fear of renewed lockdowns in Mumbai, if COVID-19 cases continue to rise. This previously had prompted downstream manufacturers to procure raw materials which drove prices.
Offers in Delhi were mostly flat to up but not as high as in Mumbai to attract more orders. Offers for secondary lead ingot in Delhi were heard between Rs160,000-162,000/mt ex-works producer prices. The Davis Index for secondary lead ingot Wednesday in Delhi settled at Rs161,231/mt ex-works producer, up by Rs398/mt in a week.
Prices of secondary lead ingot were slightly higher as battery scrap prices rose in the week. The market for secondary lead ingot in Delhi strengthened in terms of spreads which widened by 2.10pc while the index moved up by 0.25pc from the week prior. Offers for battery scrap also rose. The Davis Index for lead batteries (drained) rose by Rs556/mt to Rs95,550/mt del Delhi consumer compared to the preceding week. The market for the grade strengthened with spreads for the prices index contracting by 1.48pc from the preceding week.
Demand for lead is expected to pick up in the coming months according to historical evidence stating that production of UPS and generators increase ahead of summer which supports lead markets, however, this has not happened yet, market participants await an uptick in demand. Most auto manufacturers have expressed a positive outlook for March after February sales figures were better than expected with several companies posting double-digit growth. Semiconductor shortage persists which is hurting production to a certain extent and may continue for the next three months.
Auto, telecom sector and commercial UPS segments are the biggest consumers of batteries. Demand should rise in the coming months which is likely to support prices, however, the fear of lockdown might spur negative sentiments in the markets.
($1 = Rs73.13)