The Hindu Business Line : Lead prices seen firm on rising demand

"A sudden growth in the automobile sector plus the boom in the information technology and telecom sector has resulted in increased demand for batteries, which mainly use lead," said Mr L. Pugazhenthy, Executive Director, India Lead Zinc Development Association.

On an average, at least 10 kg of lead is used in automotive batteries. "Automotive batteries industry has become a high growth one," he said.

Despite strong demand, Hindustan Zinc Ltd (HZL), the sole producer of primary lead in the country, cut the metal's prices by Rs 1,000 a tonne to Rs 61,000 on Monday. Still, the prices are higher from Rs 51,500 during the same period a year ago. Metal prices in the country are revised every fortnight based on the London Metal Exchange trend.

The growing demand will keep the prices firm, according to industry sources.

"Lead consumption in the country is estimated to be around 1.5 lakh tonnes. In fact, it could be between 2.25-2.5 lakh tonnes if one takes into account circulation of re-cycled lead," Mr Pugazhenthy said.

Bare details are available about lead recovered from lead acid batteries since most of the recovery units are unorganised. These units rarely submit details in order to avoid paying duty.

HZL produces around 16,000 tonnes of lead a year. This is besides its captive demand. HZL has a capacity to produce 35,000 tonnes and shortly, it is set to commission a new smelter with capacity to produce 50,000 tonnes of lead a year.

Primary lead is derived from the ores, whereas secondary lead, which makes up a sizeable portion, is produced through recovery of the metal from batteries. Both primary and secondary lead is used in making batteries.

Globally and in the country, 75 per cent of the lead consumption is by the battery sector. Other applications for lead are alloys, pigments, cable sheathing etc.

"In India, the lead acid battery segment is witnessing a 15 per cent a year growth due to demand for automotive batteries, uninterrupted power supply system and power inverters. Thrust on infrastructure sectors such as telecom and power have given an additional boost to the lead acid batteries sector," Mr Pugazhenthy said.

Besides India, lead is witnessing a quantum jump in demand from countries such as China and those in South-East Asia. In the developed countries, the growth in lead demand remains flat.

"Lead is re-cycled because it is indestructible. But the bane of Indian recovery units is that most of them do backyard smelting and as a result, recovery is low," Mr Pugazhenthy said.

Globally, secondary lead production growth is rising particularly in countries such as Australia, European Union, the US and Japan.

"Our country lacks technology and policy to promote production of secondary lead in a big way," industry sources said.

According to Mr Pugazhenthy, not much of lead is being imported as secondary lead is able to cope up with the demand apart from primary lead.

"There are 5-6 big players who produce secondary lead. They produce between 60,000 and 75,000 tonnes of lead," he said.