Scrap,lead pricing

Metallic scrap is one significant source and can be pnrchased by the smelter or refinery at prices reflecting a nominal discount to the prevailing LME price for refined lead. However, the bulk of secondary lead is derived from the processing of recycled scrap lead-acid batteries. The trade is very localised with no general standard terms and the cost to the secondary smelter often simply reflects the cost of collection of scrap batteries. 

The reverse situation does not apply to secondary lead, since scrap availability is relatively inflexible, and any significant growth in lead danand must be met from increased primary lead production. This will result in inaeased concentrate demand and cause an increase in lead price. 

The lead is supplied by the metallurgical works in the form of pigs of about 99.8 per cent purity from the melting kettle it is fed directly to the container. Scr ip lead is often added to the lead bath in order to reduce the price of the pipes. Pure lead gives aboud 2% lead dross, whereas about 8% residue have to be taken into account in scrap lead. The dross is collected and refined by chemical works. Larger quantities of scrap lead are refined in a simple manner by heating it to a temperature of about 450 to 500 °C and skimming off the dross from the surface of the metal. 

The LME contract specifies refined pig lead of minimum 99-97 per cent purity for good delivery. The LME lead price was quoted in pounds sterling per long ton until 1969, when the standard weight was changed to metric tons. From July 1993, the price has been denominated in US dollars per metric ton. Prices are quoted daily for cash and three months metal, and these are widely reported. Futures prices are also available for up to 15 months forward. As well as its importance for the pricing of refined metal worldwide, the LME cash and three months quotations form the basis for sales of lead concentrates, scrap raw materials and intermediate products (see Chapter 16 and below). 

Scrap prices (and, indeed, scrap supplies) are highly sensitive to refined lead prices, and will often move in parallel with them, though with a time-lag. They will thus describe a similar cyclical trend to primary metal prices. The relationship between scrap prices and concentrate prices is likely to be somewhat more complicated, to the extent that they can be considered competing raw material sources. Thus, although we would normally expect the two price series to be closely connected, there might be times when they move in opposite directions. The key aspect here is that the supply of secondary raw materials (scrap) is more price sensitive than that of concentrates in other words its price elasticity of supply is greater. 

Some evidence on the crucial role of stocks and stockholding behaviour in lead price formation and market evolution was presented above. Although, ideally, a survey of lead stocks should include raw materials (concentrates and scrap) and semi-hnished or intermediate products Oike lead piping or batteries), in practice data availability restricts comprehensive analysis to refined metal. Even here, however, data coverage is incomplete and sometimes inconsistent. 

Metal Bulletin (MB) is a biweekly journal containing metal industry news and detailed price information, including a number of series (many of which are MB copyright) which serve as reference prices for industry transactions. As well as full LME lead price and stock data, MB publishes a range of domestic producer refined lead prices, and provides indicative lead concentrate and scrap prices. Specialist price services are available by fax or telex, and an annual price and data handbook is published which includes historical statistics for all series. 

Early secondary battery smelting was carried out in small-scale operations, often by the scrap-metal merchants themselves. Whilst most of the small operations have now been phased out in Western countries via either closure or consolidation, small-scale smelting practices still exist in many Asian countries, e.g., India, China and Indonesia. Even in these countries, where recycle rates are very high, price is the driving influence on the scrap-metal industry. This applies no less to the recovery of lead. 

The high recycle rate in developing countries is supported by the scrap prices, which, even in western terms, are very high. In China, spent automotive batteries are purchased for US 270 300 per tonne, compared with an equivalent of US 80 90 per tonne in Europe and US 60-80 in Australia. This creates a strong demand for all types of lead acid batteries, including small 6-V and 12-V VRLA batteries. Western countries are still devising collection schemes to recover batteries of this size, which is a challenging task due to their low per-unit value and wide dispersion. 

International trade in lead scrap is generally more volatile than trade in concentrates. This is because the quantities of scrap traded are usually smaller, and are often sold as spot tonnages, rather than under long-term contract. International flows of scrap are largely determined by specific (perhaps temporary) local shortfalls or surpluses in supply, requiring the movement of material between countries. They will also be influenced by metal price differentials, with scrap attracted to regions where local premiums allow secondary producers to offer favourable terms. 

Metal Bulletin publishes indicative lead scrap prices for the UK maricet and (since 1992) for the European market, on a weekly basis. The prices quoted are considered to be representative of business between the largest merchants and scrap consumers, and are normally related to a specific LME session. For the UK market. Metal Bulletin provides quotations (on a delivered consumer basis) for the following types of lead scrap soft scrap, battery plates, and whole batteries. In addition, a price for lead ashes and residues is indicated, which is based on the LME price, net of a treatment charge. For the European market, prices are provided for soft lead scrap and drained batteries (on a cif Rotterdam basis). A similar range of regular lead scrap price information is provided for other regional markets by their own locally-based publications like American Metal Market and Metals Week in North America, and by Japan Metal Bulletin. 

There are no publicly available statistics on lead concentrate stocks. Trends in stocks can of course be estimated from a comparison of concentrate production and smeiter requirements, but these give oniy an imperfect guide. Scrap inventories, by their nature, can oniy be guessed at, because they will vary with metal prices and coliection rates. More data is avaiiabie on battery stocks held by manufacturers and stockists, but coverage is limited outside North America. 

A weekly journal focusing on the recycling of metals, paper and solid waste. Includes LME price data and commentaries, and indicative prices for lead scrap in the UK. 

These sister publications both appear weekly. Metals Week provides industry news and market analysis, with a North American focus. It also includes details of LME prices, reference prices for primary and secondary refined lead (MW North American producer price) and lead scrap prices. Metals Price Report features longer articles, comprehensive information on LME stocks and details of prices for LME traded options (as supplied by Billiton-Enthoven Metals). 

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