Lead prices to soar on cut in output, low stocks

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Mumbai, Sep 25: Lead metal prices on the Multi-Commodity Exchange of India (MCX) are expected to remain at the stable-to-high level in the short term, chiefly due to declining stockpiles and potential cuts in production by larger smelters. On the London Metal Exchange(LME), the cash price of lead was up nearly 7.4% to trade at $1,921 per tonne on Wednesday, from $1,788 a tonnes quoted on September 11, while the MCX lead November futures were up by 12% to trade at Rs 93.80 per kg on Wednesday, from Rs 83.65 per kg recorded on September 5.

Lead, mostly used in batteries, has been trading high in the last few sessions as LME-monitored stockpiles declined sharply to below 69,000 tonne-levels (down by over 33% from a high of 101,900 tonne in 2008). During September, LME inventories have fallen from 81,875 tonne, to 68,400 tonne on Wednesday. “Declining inventories coupled with lower exports from China, have helped in reviving the demand sentiment for the metal. The cancelled-warrants ratio, an indicator of spot demand, was seen fluctuating between the 0.11-0.16 levels in September, which was as low as 0.07 in August,” an analyst with Karvy Comtrade said.

A high cancelled- warrants ratio indicates more offtake of the metal from the exchange, he added.

China’s Yuguang Gold & Lead Co, China’s top lead producer, will shutdown one of its three lead systems for repairs, from October 6, for 35-45 days. This will reduce the firm’s output by around 10,000 tonne, which constitutes around a quarter percentage point of global lead production.