23/03/2009

EASING THE RIDE ON THE LME ROLLERCOASTER

Although lead prices have dropped in recent months to £750-850, after peaking at £1,909 in October 2007, we could now be facing another period of instability as the lead price rollercoaster once again gathers speed following a 28% rise on the London Metal Exchange (LME) during March. And whilst prices have come down, they are still considerably higher than the average over the previous decade of £300-400 per tonne.

As the price of lead is the largest single cost in manufacturing adhesive leads, RegaLead is doing what it can to ease the pain of this instability for our customers. For example, we took the unusual step of offering LME rebates on orders taken whilst prices were temporarily lower to help balance out the LME surcharges to customers when prices were high. RegaLead has also made engineering modifications to its current plant to reduce waste levels by more than 30% in our own internal processing.

Furthermore, we can advise customers on reducing their own lead wastage and on the most cost effective ways to recycle all the products we supply. During the dramatic changes in lead prices over the past two years, most of our competitors have either passed on the increases to their customers or introduced LME surcharges. However, now prices have fallen many have abandoned the surcharge/credit system ø leaving their customers with a sense of uncertainty if prices do start to rise again.

So are we in for another bumpy ride on the lead price rollercoaster? Like all commodities, lead prices are driven not only by supply and demand but also speculation. Stocks were reduced during 2007 following a massive increase in demand from China for the manufacture of electric bicycles. Production problems in South America and environmental concerns at an Australian mine also caused lead prices to spiral. Then in 2008, a dramatic reduction in demand from China in response to the global economic downturn brought a return to capacity and a drop in price on the LME.

The latest increase in prices is caused by renewed purchasing in China as the Chinese governmentÕs fiscal stimulus takes effect. However, analysts are uncertain about the impact of this in the longer term, and with the world economy still in turmoil no one knows whether the recent rises are a temporary spike or just the beginning of another rollercoaster ride.

Whatever the future holds, you can be assured that RegaLead will continue to invest in the growth of decorative leaded glass worldwide, and weÕre demonstrating that commitment to the industry and our customers with plans for new tooling and plant to be announced shortly.

Details of the latest developments are available from the RegaLead team on 0161 946 1164 or email sales@regalead.co.uk 

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