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