Tight spot supply of Iranian lead ingots have pushed up premiums for major importing countries such as India and some Southeast Asian markets, prompting buyers to search for alternative brands and lead bullions.
Premiums for secondary lead on a cost, insurance and freight basis for India rose by $10 to $50-60 per ton from a week ago, with offers of Iranian units reported at the top end of the range. That is the highest in the past nine months.
Iran, the key lead supplier to India, is in the midst of a currency crisis, having lost 14.4% in its value against the US dollar so far this year, making Iranian lead exports no longer profitable.
“There are not many spot Iranian units around and domestic lead output in India has also slowed down due to lower productivity amid the summer heat. Many lead buyers are looking for spot ingots from overseas,” a secondary lead producer in India told Metal Bulletin.
Northern and central India have been hit by heat waves, as the Indian Meteorological Department recorded a maximum temperature of 48.7°C on May 29. Daytime maximum temperatures are very likely to continue in the range of 42-45°C throughout the week.
“They have to work shorter hours. Domestic lead supply shall remain tight in the coming few weeks. This high premium will be held up,” the source added.
Some buyers in India have turned to source lead bullions, typically of 97-99% lead content, from Egypt and Saudi Arabia, a trader source based in Middle East said.
Some other Indian buyers are looking to switch to costlier European brands of secondary lead ingots.
“I recently received a request from India for over 1,000 tons of European brand secondary lead ingots; this big an amount is quite rare on the spot market,” a Europe-based lead trader said.
A difference of over $40 per ton can be seen across European, Korean brands and Iranian units, whose premiums are typically cheaper.
It is not only the Indian market that has seen an increase in lead premiums; Southeast Asian countries are also feeling the pressure from the supply shortage of Iranian units.
Premiums for secondary lead on a CIF basis for Southeast Asian countries rose to an 11-month high of $65-85 per ton, up $5 per ton from a week ago, Metal Bulletin assessed.
A deal for Korean-branded lead was reported at slightly below $100 per ton and another deal for European brands went above $110 per ton. By contrast, Iranian units could be bought at above $60 per ton, according to market participants.
“Some operators said some shipments from Iran to SE Asia were delayed for almost two weeks. There is a lot of trouble and issues surrounding Iranian shipments now due to the tensions between the United States and Iran,” said a lead trader, which had sold contractual tonnages to the area.
But long-term contracts are still being fulfilled, as major Iranian lead producers are yet to cut their production volumes, the source added.
“However, if the currency continues to remain weak, eventually they will have to cut their production levels. Iran, after all, cannot domestically consume all of its lead output,” the source said.
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