Lead Market Update (March 13, 2013)

Lead for three-month delivery is now trading around $2,190 per metric ton (MT) on the London Metal Exchange. That’s down from $2,417 a month ago, according to data from Metal-Pages.

Credit Suisse forecasts that China’s lead supplies will exceed demand by about 206,000 MT this year, which is enough to supply the country’s factories for about 15 days, according to a February 19 Bloomberg article. A large part of the growth in the country’s supply is expected to come from recycled lead as consumers replace the batteries in the cars and e-bikes that they have purchased in recent years.

Even so, global lead demand is expected to rise about 7.5 percent this year, to 5 million tons, largely due to China’s recovery; the country’s economy is expected to grow at a rate of 8.1 percent in 2013, up from 7.8 percent in 2012, with some analysts expecting that growth to tighten up the lead market. On that note, in January, commodities consulting firm INTL FCStone called for a surplus of just 50,000 MT this year.

Supply exceeded demand by 64,000 MT in 2012, according to the International Lead and Zinc Study Group’s 2012 annual lead review, released February 19. Global production rose 11.5 percent during the year, including a 20.4-percent increase in China.