Document BRY5bnEJdpX5vy1EmXEkyk0Jk

'IWPIf fPSR'UBI iPIPWlBWfBSPP?? 4 ; o . -.** 1 U , LIA 1618 9 LEAD INDUSTRIES ASSOCIATION------ MO UDOMOTOM AVtMUC NSW TOOK 17, M. . Kff FCB PDBUCATTDB THE MCOKDAKT LEO IXJCSTRre Jhlian S. Bars, President Bar* ud Oo,, Inc. A aoath or o ago Z attended high school graduation* and after listenlnc to tht rirn--nnwont speeches, X gathered that tbs world u la each tarrlbla shape that nothin* owald am It azcopw tha graduating class* X have boon eaked to explain s o o n of tbs problems which faoa tbs aeo* oodaxy lead indMStry. Believe me* It will taka more than a gradeatIng class to solve our prohlwas. Whst *t need perhaps la a crystal ball* Of oourse* theoretically there should be no problasw. First* there should be an mq&e and fairly steady supply of raw material. X say this because alaost all lead* except that used in gaaollna* wasted aaounltioa and paint* goes through a qrci^ and eventually, after nse* cones back into tbs ayatam in ths font of scrap. The best sxarple of this is battery lead, the largest sincls source of secondary raw material. Be find that as each battery wears out it is rtplaoed by a new one. Tbs average battery has a life of slightly less than two years, and atatlatiea show that over a period of tine approximately eighty peroaat have been returned in ths form of scrap to the seconlsry market. Ibis is dons quickly and efficiently by ths collector and breaker. Second, there should be no problem selling secondary lead. At jrtnaiil tbs United States is imparting approximately one third of all tbs lead it coneuaes, which last year was soao three hundred eighty thousand tons. (Mitdirp leal accented for aboit one third of the load consumed* or approximately four hmdred eight thousand tons* with primary production *w-g up ths other one third* or ebout four hundred four thousand tons. Tins* If the secondary shelter uses proper metallurgy, efficient mechanised equipment* and produces a good product at a competitive price* it stands to reason that he should be able to dispose of his product. Although ths theory makes sense, X ms quite sure that many times during the past fifteen months the secondary saelters would haws questioned It* and particularly- would have aaked vty they were haring so such trouble selllrc their lead even st large discounts. Let us see what happens to our theory. Our theory begins to break down as soon as tha secondary miter finds difficulty in selling hie output as antisocial lead and finds it neceaaaiy to eoftan part of his production. Tbs secondary aneltera are primarily manufactures ef antlmonial lead* Their arersge furnace metal contains antiwxy* and if thqr use a large percentage of battery lead it should run about four to four snd oca half percent. It is much more econadcal snd efficient to add antiaoty and mate specification metal than it is to remove antlmoiy and mate eoft lead. eft-esented at the 22nd Annual Oweting of the load Industries Associa tion April 13-Hi, 1950* Chicago* HI.* at ths Fuel Discussion of Lead Froduoorm. **> "!wmm 1 'MW ".u u mj iij ip i u u u iu u ij w j w i. u vw'mww"*1' * L IA1619 0 mai "'iW-w*.-' ilMAwM'ii'ISilrWili,.. 1 t V A battery 1 originally ecsspceed of about half antinorlal ana half aoft lead. If the secondary waeltar m to often hie natal tothis proportion wo would find the antiaonlal lead going book Into the battery Industry, but the secondary soft lead, [rede i or 99,9+Z which he normally : eeniu'acturea would net be eultable for reuse In that indue try beoauee af t minute percentages of sliver and copper. These #laments can be roa-ored i free secondary natal Just as aixply and efficiently as In prlaary natal I by desilvcriting, except that becauaa the ispurities are eo call, it la not economical. This, instead of secondary soft lead going book Into the battery industry and cpieting the cycle. It la usually replaced by prl~ nary corroding lead, and the eeoandary natal baa to find another outlet. At this point our theory weakens evens ere. then thla eeooodnry \ soft Tied has to find another outlet It has to ooepete with prlaary lead and usually bo* to be add at a discount with freight aliened to destina tion. lias*, printry Is sold on a delivered baaia, while eeecodary lead Is sold on an f.o.b. hipping point baaia. Zf we era going to allow die- soaits and freight, then we have to buy our rm material cheaper, } \ 9 * Te nor find ether factors affecting o u t theory, and they beooa licwrtaot probleea. These problnu are as followst FIRSTt We hare a United supply of scrap naterlal. At the aarkwt prloe the secondary aaelter can a^tect to buy a oertoln qiaatity of aaterisl in his locality, and lids area la Halted by the cost of tiw freight. It the secondary aaelter desire* to increase his production to meet unusually large customers' order* he has to buy the additional scrap free a greater distance. Tras these points he has to eccpensate the sellers for the ad ditional freight, and In may Instances ends up by having to per sore for the rulerial in Uls awn locality as well. Kit competitor nay also be in the sane position, with the result that before long the two neltera are vying with each other to get the available euppiy of naterlal. In buying It they nay raise the price so high that they both sustain a lost. Price will do ooet to bring art scrap. This was proven In 19ti9 vdten the price of lead was advancing ta'ard the peak of 21*1 per lb, In this year alone secondary production was over 500,000 tons, and scrap cane out of every nook and corner. Because prlaary producers would net meet the demand, the considers bid up the price of secondary by offoring precliBt. This was foolish, far at the pred in stage the coneusere were actually coopering with theesalves without getting any additional Material. (Z aa sura you will all reaaibcr uhat I naan.) i SaCCtOr He have the problew of eeccndaiy supplies and their prloaa haring a aucu wider fluctuation than prlaary supplies and prioes. This la because they are more sensitively Influenced by weather conditions, dealer psychology which aanlfeete itself in apoculativa boarding or dieaping, and also by eccnaclc and political influences. There was such evidence of theee fluctuation* In the last year or two. In 19US when the supply wes so tight, secondary lead add at large praoduas, while today the situation is exactly the reverse and secondary !- *tgmm HI IHPUft m wmmmmmmmmmmmmrn LIAlfc191 1 i i I 0 -3- leed Is being sold at large discount*. During 19(5 when thi prioe *aa approaching tha top we had ouch (peculation and overbuying to build \ip inventories beyond nonad wonting requireaents, and ever, the Oovemoant caaa into the nnrket at tha coat orltical aooent with their stockpiling progrm, All this wee ebnornel, and with the slid viator* aI iShS-lif and tho battery industry' declining (ales, ve suddenly had an about* fact. Ia tha third quarter of 19(9 lead recovered teapcririly, tfaaa it aaoed off ecala and haa bean getting easier ever since. These vide fluctuations la scrap prices apd supplies were quickly reflected ia the saelting charge of the secondary eaeltere. They buy their scrap ecBpetitively, paying for the leed content at tha quoted Z 1 U J price of leed, less a belting charge delivered to their pleat. The welting charge includes all expense* of melting, artel losses, overhead and profit. In addition, It reflects any prmltsu or discounts on their finished product, and indirectly the nelter'e forecest as to the strength er weakness of the market. Tho smelting charge haa varied In the past twu years free alnus (10 to plus (150 per ton etf rev Material, aad it haa been the best barometer of tha Lead price and conditions In the lead Industry. THlIdu tie have tha problm of maintnininj a steady production. Because ve have a Halted supply of scrap, aad because w* art exposed to dealer tactics of speculative hoarding end dmplng, and because there ia lest collecting, breaking and aonnent of batteries in vlater, there an* tiaas when here a scarcity of rev cate rial, while at other tiaws a surplus. It Is not ecor.acd.cal for a welter to be shut dova for lack of material, nor is it practical for him to valt until he gets orders to buy his rav material, as this vould take too long. Today, rith hand-to-mouth buying the constaaer does not mat to buy too far in edvxmoe and vasts him lead shipped procptly. Thus the eeccodary saelter finds it necessary to cany.a stock for Ha eustmert and a cue tines buy vitloat orders, even vhen the market looks veak, ao that he can Maintain the operation of hds plant. Of course, these purchases are highly speculative. fUJl.THt tie here the problea of market risk end, coinciding vlth this, the Impracticability of hedging on the Casaodity On a rising market the cor.tuner usually tries to spot the pries, vHls on e declining market he likes to pay on the average of the month during which he takes delivery. Far the nost part the secondary mialter buys on a spot price regardless of the market. Since approximately 30 to US days elapse between the time of purchase and actual sale, there la quite a speculation if the market changes during that period and very llttla vay in vhleh to get any protection. This brintfius to the possibilities cf hedging. It ia ay opinion that the Lead Coatoc&ty Exchange Is entirely too inactive to make a good hedge. This is not only true nov but vas alao true before the var until tha exchange dosed in 19(2. There are three gredes of leed vhleh are acceptable, oorrodLng, caman dasilverised, and dcHoal lead. A secondary- welter can and does make there grades and nay hare his brand Hated as acceptable. lUrovur, I here pointed out before that nered ly it ia not eooncaioal far him to mk* these grades, thus, he avoids using the Skchang*. m - t i..... i- i i i i * * - " 1* * - ....-rri .................... . -- rnmmmmmmm m L IA16192 It tttn to at that It would b a lot wort s.nsibla to list a grade A lead of 99,9*2 aqulvalent which night oak* tha Eschsnca a nob nor* active and realistic market. Uany coneuaers purchase this grad* just as ths Bevy and Printing Office haws for oany years. Certainly If the eeconu&r/ laad business Is one-third of all the lead sold In tbs country and the;' produce a large quantity of 99,9*2 lead ecor.aedoally, they should be entitled to bars this grads listed. I spoke to a Maher of the Ccaeodlty Bcnhangs recently end asked If a grade A 99,9*2 l*cd eould be listed. I suggested the following specifications for this grade of lead: Ag ptfMOfc .oa Cu .01$ as) Snj m m .01 8b) Zn m .001 r .002 i B1 .025 i This specification shows a wlrvlnm purity of 99,932, V* could also Mbs a cheated lead or copper laad with only adnor differences fra: the ASH specification. I hope la the near future aasethlnc can be deM at this score. 9 FITHt let us lock now at saae of the selling prcblwas. Tfe find a surplus of lead on the market at present accompanied by price cutting and Instability caused by the following events, let us discuss sntiaorrlsl lead first. (a) Pallow!ne the change over fra a seller's to a buyer's market a little orer a year ago, severrl earths elapsed before re--' sue': lead was sold. Stocks aecrsrulsted at the saelter. Due to theoautloue buying policy of the consumer and tds lack of confidence In the a-rrket these stocks have t' not been reduced. * (b) 3e had two successive wild winters which were rot oondodve te good bcttcry businees. This was particularly true of the replacement bat tery business which accounts for about 60 of all batteries sold* (c) During ths past year a great deal of antiaonitl lead was softest ed because soft lead coild be sold principally to the Ocrrrncwnt with tbs resulting aocuBulatlon of high antimonial lecd as a by-prodot. i !& (d) Because foreign antimony metal and ores eould be purchased far bales tbs dowetlo price, they were Introduced and used rather than the sur plus saoendary high antimonial lead *ilch had accumulated. (e) Because the lead-tin-antlaony alloy business also was poor dur ing this period, sow of this swtal was dstlnned and entered ths antimonial laad market. low let us look for a maMrtt at soft lead sA ae. '-i).ji.pij! j i, ii.iuis j'lWBiw )J . i |iamiMpiiiij h t> tysmiirniiiiL s:i i , , lit HaMit amm *m, --- -------------------------------------------------- *5------------ --------------- ---------------------- (a) Be bar* tha inability of tha aaeondary waiter t tall 99.9MC grad* A lead to tha Ooverrment for stockpila or deliver It on tha i~-nih.np aglirwt a hedgin^ contract, Thai the; here to eell thle lead oc tha often market, particularly In ewpetitlon with foreign laad, (b) "* have foreign laad underselling our dwaatie laad, Tha foreign laad which la flooding tha country la doing mere to undermine tha market and oeuea price instability than anything alea. However, this waa largely soda possible by tha devaluation of tha potad, Thla altoatlCB la probably temporary In that tha foreign eountrles are not sufficiently re built to absorb tha laad tbty would namally oonsuae. In tha Interla, the lead producing eountrlaa of tha world art shipping to tha Unitad 3tata ta (at dollar*. Thla le hurtlas tha laad producar In thle country, ae prioowlaa he la at their aarcy. A foreign lead producer has tha tea coeta nee ae ha had befora devaluation, but ha ean aall hla produet In dollara for considerably aera money. in taa ether tuna, a procuoer in this country ia balm squeesed between rising eeete and a declining prlaa. Apparently tha theory that tha aaeondary lead waiter daea net here any problans la prorad to be a syth, I have mentioned only five problems and there aro still ethers. It has been a privilege to hive had the eppoatedty to brine sow of our prcblaoe to your attention, and especial ly to the atte.-rtioo of the eonsuner, Tha producers, I as auru, are already aoquainted with tha facts, gone producer* even have aecondary aaalters of their own. It aeeoa to ma 0 tha oonsuaer should be rltally Interested in the problems of tie secondary waiter, and it should be to his advantage to bare a sound aaeondary laad industry. I believe that I have already mentioned that aaeondary lead was one-third of all the lead sold last year and was over ona-htlf of tha en tire daaestic production. Since tbs *tentie*' primary production has bean declining in the United Stctas, Wile secondary production has bees increasing* Lares imparts of forel^u lead are only teaporaryj therefore, it areas that la tima tha oenoumcr will be acre dependant on aecondary laad, thus, they should ressnra a portion of their purchases for it. I believe that the oonswer should sak himself today. "Can X ass secondary lead In my operation? Do I have to use a desllverlsed laad or a lead with a very low blsauth ccrrtentT* In aany operations tlsae ele mentc are not hareful in the quantities present in Grade A or 99.94S specification lead. Uany tines 2 have found canstsaer's specifications are copied from the primary brand that was originally purohaaod snd tmppanad to bo satisfactory. I aa aura that during tha laad shortage many ccctuaar* fotnd they eould use aecondary laad, although it was bought at s prwaiw. Today it is being sold at a discount. The oonstsaor is usually intares ted in three Vires w.wn buying lead: quality, steady ecuroe of supply and reaacnabla prioa. 2 feel oartain that many seoondsiy snoltars eaa moat all three of these qualifications.