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Lead won’t notice, analysts say, but plastics might

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With the lion's share of lead output going into battery production, analysts aren't concerned that the removal of the heavy metal from fixtures and fittings on a state—or even federal—level could have much impact on demand.

But while California Assembly Bill 1953 and its Vermont counterpart won't materially impact the fundamentals of the U.S. lead market, the "green" legislation could spark some unintended consequences in other metals markets—from minor metals supply to a further push away from red metal products in the plumbing sector, analysts said.

The idea that the removal of lead from traditionally leaded alloys won't impact demand might at first seem counter-intuitive, but according to metals industry analysts even if the legislation were to be enacted nationwide the impact on the market would be minuscule.

"Overall, it's unlikely it's going to have much of an impact on demand in the U.S.," said Paul White, head of forecasting and statistics at the International Lead and Zinc Study Group in Lisbon, Portugal, noting that lead usage outside the automotive and industrial battery sector is just a drop in the bucket.

According to data from Deutsche Bank AG, only 11.3 percent of total U.S. lead consumption in 2008 went to non-battery applications, and only a fraction of that going into alloys.

Jon Barnes, principal consultant of copper fabricating at CRU International Ltd., London, agrees that the legislated removal of lead from plumbing fixtures would be essentially inconsequential, even if such a requirement were to catch on coast to coast. "The demand side is so dominated by batteries that this is just sort of a footnote in the lead industry," he said. "A lot of brass is produced from returned scrap anyway, so there's not a lot of brand-new lead that goes into making brass every year. The lead industry won't even notice."

But that doesn't hold for other metals, analysts said. While the lead market might not feel the impact of AB1953 and similar legislation, the minor metals markets might. Take, for example, bismuth, a minor metal with annual global production of about 5,000 tonnes vs. lead production of nearly 9 million tonnes. If manufacturers were to replace lead with bismuth to retain the alloys' properties of machinability, a substitution that some companies are already exploring, the lead market might not feel the impact but the significantly smaller bismuth market surely would.

"Very little bismuth is produced each year. The idea of using expensive and difficult-to-get-out bismuth is like replacing oranges with caviar—it might taste better, but economically it makes no sense," Jack Lifton, consultant at Jack Lifton LLC, said.

"Even if those legislators hold their breaths until they turn blue, they can't conjure bismuth out of nowhere. These guys, without thinking of the consequences, have made a move that's probably foolish," he added, noting that using high-demand natural materials like bismuth and silicon in place of lead will severely curtail the minor metal supply and drive up prices.

With new lead-free alloys generally clocking in at higher prices, consumers might forgo brasses altogether in favor of cheaper plastics, analysts said.

"People will try to find a cheaper solution," Barnes said, noting that the shift to plastics first began to take hold in the plumbing industry when copper prices soared. "The last thing they want is to be telling customers is they've got to be using this new lead-free alloy and it's going to cost 50 percent more."

Lifton agreed. "The substitution into plastic is going on already due to factors like the cost of metals. If you want to do away with lead, you're going to see (customers) go to another technology," he said. "They're driving substitution." ANNE RILEY


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