Lead Demand Growth in India Is Twice Global Pace, Recycler Gravita Says

Lead demand in India is expanding by 10 percent to 12 percent a year, about twice the global rate, on increased battery sales and infrastructure projects, according to recycler Gravita India Ltd.

“There is a good expansion in the automobile, telecom and power sector,” Navin Sharma, marketing vice president, said from Jaipur. The company’s sales were about 50 percent higher over the first three quarters of this fiscal year compared with a year earlier, Sharma said yesterday by phone.

Metals demand in the second-most populous nation may gain 80 percent in the next five years, Barclays Capital forecast in a report last November, saying commodity consumption has reached a “tipping point.” Lead futures on the London Metal Exchange have gained about 11 percent over the past year.

“Car sales is the big driver,” Sharma said. “There is a shortage of power, so all batteries for the office backup as well home backup, the inverters, will also be a good driver.”

Three-month lead futures traded at $2,538 per metric ton on the LME at 11:29 a.m. in Singapore. The price more than doubled in 2009 as the global economy emerged from recession, and increased a further 4.9 percent in 2010.

Lead should remain “firm” in 2011, trading between $2,300 and $2,800 a ton, Sharma said. LME lead futures peaked this year at $2,712.75 a ton on Jan. 6, the highest level since 2008, when they surged to $3,480 a ton.

Annual Demand

Annual lead demand in India is about 500,000 tons, with about half of that total met through recycling, Sharma said. Gravita India produces about 20,000 tons of the metal domestically a year, he said.

China, the world’s largest metal consumer, used about 4 million tons of refined lead in 2010, up 3.9 percent from a year earlier, according to data from the International Lead and Zinc Study Group.

India’s government estimates annual vehicle sales may double to 3 million by 2015, helped by rising incomes and the creation of new jobs. Prime Minister Manmohan Singh plans to double spending on roads, ports and power plants to $1 trillion in the five years to 2017 to improve infrastructure.

“We foresee good demand in the future also because of infrastructure and power projects,” said Sharma.

India’s economy may expand more than China’s in the next 10 years if investment curbs are lifted and there’s increased spending on roads and bridges, according to a forecast last month from New York University professor Nouriel Roubini.

The South Asian country’s gross domestic product climbed 8.9 percent for a second straight quarter in the July-to- September period, according to government figures. China’s economy expanded 10.3 percent in 2010, the fastest pace in three years, the statistics bureau said in a report
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