NEW YORK Lead market
sources say that some 2013 contracts have been finalized using
a "cost-plus" pricing model, although one trader is adamant
that no major business has been done and says that producers
and consumers are still "butting heads."
One broker told AMM
that several contract discussions "are in their very final
stages," with secondary lead producers having "held the line"
on adopting a pricing model that incorporates their scrap
acquisition and production costs rather than London Metal
Exchange pricing (
amm.com, Nov. 12).
"Some consumers seem more
inclined to say they understand the situation, that they
dont like it, but theyll do it for the first three
months," he said.
One producer source also said
that "there has been some success" in pursuing a cost-plus
model for 2013 contracts.
However, a trader said that the
majority of business has yet to be finalized. "I dont
believe any major contracts were signed at cost-plus. Maybe
some minor ones," he said. "Were still seeing major
consumers and producers butting heads. ... I think theyre
going to go month by month."
The abundance of cancelled
warrants for lead metal in LME warehouses could come into play,
the trader added. "If (consumers) dont book anything with
the secondaries, they may just buy some of that metal."
The LME is currently reviewing a
rule change that would require warehouses to deliver out an
additional 500 tonnes per day of cancelled material stuck in a
queue behind another "dominant" metal (amm.com, Nov.
20). There are 40,625 tonnes of canceled lead warrants
stockpiled in Detroit, where primary aluminum is the dominant
Meanwhile, primary lead spot
premiums have dipped to a range of 13 to 15 cents per pound
from 14 to 16 cents, with market participants reporting a
slight easing as the LME price moved higher.
The LMEs three-month lead
price ended Mondays official session at $2,241 per tonne
($1.017 per pound), up 4.2 percent from $2,150.50 per tonne
(97.5 cents per pound) Nov. 12.