Commodities

Lead at premium in MCX vis-à-vis LME

Rajalakshmi Nirmal Chennai | Updated on October 06, 2020

More producers are delivering their stock into the MCX warehouses

The inventory of lead has increased sharply at the Multi Commodity Exchange (MCX). A report on October 5showed that the total inventory in lead at the MCX warehouses was recorded at 1,077 tonnes, up 756 tonnes from the previous Monday (September 28). Talking to traders in the market, BusinessLine learnt that it was the high premium in the MCX, over LME prices, that saw more people interested in delivering their lead to the Indian exchange.

MCX-Lead is currently at a premium of $80-90 per tonne over the LME prices. Only a week ago, the premium was about $60 per tonne.

Sachin Muni, Managing Director of Kedar Metals, a company in the manufacture of lead-based chemicals for over 25 years, said: “Indian manufacturers of lead won’t break even at the current price of the LME of around $1,780/tonne; the price of battery scrap, which is a raw material for lead, is quoting at a high price in India because of shortage.”

The LME price of lead, experts say, is just the base price; at the MCX, the quoted price includes the premium charged by manufacturers for the logistics and other costs, bank interests and a profit margin.

Lead supply is tight in India compared to the global market, because most of the manufacturers are running at about 60-70 per cent capacity, says Ashish Bansal, Managing Director, Pondy Oxides, because of “delayed supply in raw material and labour shortage” - which is a reason too for the premium price of lead in India.

Published on October 06, 2020

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