(ONLINE TRADING)
   
 
Metal commodities 
Lead
 

General Characteristics Of Lead

Lead is a very corrosion-resistant, dense, ductile, and malleable blue-gray metal that has been used for at least 5,000 years. Early uses of lead included building materials, pigments for glazing ceramics, and pipes for transporting water. Today's major use of lead is in lead-acid storage batteries. The electrical systems of vehicles, ships, and aircraft depend on such batteries for startup, and, in some cases, batteries provide the actual motive power. It is also for soundproofing in office buildings, schools, and hotels. It is widely used in hospitals to block X-ray and gamma radiation and is employed to shield against nuclear radiation both in permanent installations and when nuclear material is being transported.

 

Supply & Demand Scenario :

Domestic Scenario

  1. Lead production equalled approximately 82,000 tonnes in 2004, mostly from secondary sources.
  2. The main constraint in lead production in the country is the lack of lead ore reserves, which necessitates large-scale imports and recycling.
  3. Lead demand in India was estimated at 150,000 tonnes for 2004. Due to huge gap in demand-supply, India imported nearly about 50% of its domestic demand.
  4. The major suppliers for the imports were China, the Republic of Korea and Australia: 54%, 15% and 10% respectively.
  5. The domestic industry is characterized by the presence of only a few players in the primary segment. The primary lead industry in India is divided between the following main players: Binani Industries Limited and Sterlite Industries (India) Ltd. (Hndustan Zinc Ltd.). Due to increasing use of lead in domestic market both players are expanding their smelting capacities for lead.

World Scenario

  1. USA, Japan, China, EU and India are the major consumers of Lead
  2. Supply is controlled by Australia and China.
  3. Lead in the global market is traded as soft lead, animated lead, lead alloys and copper-base scrap.

Factor influencing demand and supply

  1. Changes in inventory level at LME wharehouses
  2. Economic growth rate of major consuming countries
  3. Global growth and demand in major consuming industries
  4. Prices of the alternative metal(s)
  5. Participation of funds
Global Exchange(s)
  1. London Metal Exchange
  2. IST of Global Exchanges (Price Clues from Other Major Global Exchanges)
  3. LME: 5.30 PM to 10.30 PM
Due Date Rate Computation

DDR is calculated on the last day of the contract expiry, by taking LME cash prices of Lead in USD, multiplied by Rupee-USD rate as declared by the RBI on that particular day.

DDR = LME Cash Price (on the last day of contract) x INR/USD rate of RBI

Approximate MCX Contract Parity Price in INR on Normal Days Against LME Cash and 3M Prices
 

MCX USD Parity Price:
LME Cash Price + (LME 3M Price - LME Cash Price) * Remaining days to maturity/90

MCX INR Parity Price:
MCX USD Parity Price * INR/USD forward rate