March 22: The falling lead prices last week touched a low of $530 per tonne on the London Metal Exchange, down from $850 in mid-1996. With this, the battery manufacturers should be a happy lot as far as the raw material cost is concerned, for they account for nearly 80 per cent of total lead consumption.However, the falling stocks on the London Metal Exchange, does indicate that the prices are set to reverse this trend. In fact, the rally witnessed over last two weeks in copper on LME, did not seem to have any impact on the lead prices. On the London Metal Exchange, cash prices for lead were hovering around $550 per tonne. Although the lead-user industry is enjoying lower prices, the lead producers especially in the organised sector, find themselves in a bad shape. The main problem for the domestic players, however, is not the low international prices but the import restrictions that prevent cheap imports.
Since local availability of lead ore is limited, the manufacturers are forced to import leadconcentrate which attracts a duty of five per cent. The import duty of pure lead, however,is 30 per cent.
Since the input costs for lead -- coal, transportation, power and fuel -- are very high, apart from high cost of funds, the domestic producers are not able to compete with the imports, the cost of which is said to be cheaper by around 10-15 per cent. Accordingly, even when the demand has been rising, the domestic producers in the organised sector have failed to show similar growth in sales. Simultaneously, imports have risen over the past few months. Unable to take advantage of this situation, lead producers fear their operations will become unviable, forcing them to close down their activities if the import duty on pure lead is not increased, or the one on raw material is not reduced.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
