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Lead Price Forecast: Top Trends That Will Affect Lead in 2024
What’s the lead forecast for 2024? Read on to find out what analysts had to say about the market heading into the new year.
Lead prices yo-yoed in 2023 as global uncertainty continued to drive volatility.
The industrial metal is an important material for pigments, weights, cable sheathing and ammunition, but its largest area of application by far has traditionally been in lead-acid batteries.
The rise of electric vehicles (EVs) is expected to weigh on demand for this battery type; however, EV manufacturers still use lead-acid batteries to power electrical systems, including lights, windows, navigation, air-conditioning and airbag sensors. Lead-acid batteries also have a role to play in renewable energy storage systems.
On the supply side, lead is typically mined as a by-product of zinc, silver and to a lesser extent, copper. Demand changes and mining disruptions for these metals can play an outsized role in shaping lead sector dynamics.
As 2024 approaches, the Investing News Network (INN) is looking back at the main trends in the lead space in 2023 and what’s ahead for prices, supply and demand in the new year. Read on to learn what experts see coming.
How did lead perform in 2023?
Although they started off the year above the US$2,300 per metric ton level, lead prices quickly shed nearly 11 percent in the first three weeks of 2023 on concerns about weak demand.
Lead touched US$2,300 again in June, which analysts at Wood Mackenzie attributed to the suspension of operations at Newmont’s (TSX:NGT,NYSE:NEM) Peñasquito polymetallic mine in an “already tight” lead concentrate market.
“Strong OE automotive figures were also supportive on the demand side of lead's market fundamentals. However, the wider macroeconomic picture has been less robust recently, particularly in China,” the firm states in a June report.
Although lead prices would test the US$2,300 level again in September, Peñasquito’s return to production in October pushed the metal back down to around US$2,064. Confirmation of the mine's restart coincided with lead prices weakening notably in relation to other London Metal Exchange (LME) prices, as per Wood Mackenzie.
Lead prices hit their lowest point of the year on December 7, coming in at US$1,973.
Lead's price performance in 2023.
Chart via TradingEconomics.
A December report from the International Lead and Zinc Study Group (ILZSG) shows that in the first 10 months of 2023, global supply of lead exceeded demand by 41,000 metric tons.
Worldwide lead mine production rose by 1.5 percent and lead metal production was up by 2.8 percent over the same period in 2022, while consumption of the metal rose by a mere 0.3 percent.
The January launch of production at Galena Mining’s (ASX:G1A) Abra lead-silver mine in Australia, notes the ILZSG, contributed to the rise in mine production. The first major lead-only mine to be brought into production since 2005 has an annual lead production capacity of 95,000 metric tons.
China, which is both the world’s largest producer and consumer of the metal, increased its imports of lead concentrate by 22 percent compared to the first 10 months of 2022, while its exports of refined lead metal grew by more than 64 percent. In the ILZSG’s October 2023 forecast, the group attributes the growth in Chinese demand for lead to a 13.4 percent increase in lead-acid battery output over the first seven months of 2023.
What factors will move the lead market in 2024?
Heading into 2024, what supply and demand factors are expected to drive prices for lead?
"On the supply side, prospects of mine expansions and the potential restart of operations in European smelters will be key factors to watch,” Adrià Solanes, associate economist at FocusEconomics, told INN via email.
The ILZSG forecasts that global lead mine supply will rise by 2.9 percent in 2024 to 4.71 million metric tons, compared to 3.3 percent growth in 2023. Increased lead supply is seen coming out of Australia, the second largest lead-producing country, as well as other top producers such as India and Russia.
Market participants will also be keeping an eye on Peru’s federal elections in April. The country is the world’s fifth largest lead producer, and has a strong project pipeline. However, political instability and ongoing protests against mining projects could have a negative impact on mining investment in the country, states research firm BMI.
New sources of mine supply for lead in 2024 include Adriatic Metals’ (ASX:ADT,LSE:ADT1,OTCQX:ADMLF) Vares silver mine in Bosnia and Herzegovina, which is expected to begin production in January, barring any further delays.
Looking over at global refined lead supply, the ILZSG sees a 2.3 percent increase to 13.14 million metric tons in 2024; that's compared to a 2.7 percent increase on the books for 2023 and a 1.7 percent decline in 2022. The restart of Trafigura’s Stolberg smelter in Germany is expected to contribute to increased refined lead supply for 2024.
As a by-product metal, global supply of lead is also tightly tied to zinc mine production. A too-low price environment for zinc can prompt miners to curtail operations as the cost of production eats into their margins. In 2023, zinc has been the second worst-performing metal on the LME after nickel due to a massive supply overhang amid stilted demand.
With economic uncertainty still weighing on global markets, that supply imbalance is expected to remain. “Regarding the global market balance, the Group anticipates that global supply of refined zinc metal will exceed demand in both 2023 and 2024 with the extent of the surpluses forecast at 248,000 tonnes and 367,000 tonnes respectively,” states the ILZSG.
What about global demand for lead? “Demand-wise, much will depend on the strength of the automotive sector, the health of China’s industrial sector and the pace of monetary easing in western economies,” said Solanes.
Looking at the global automotive market, an S&P Global Mobility report shows a projected 8.9 percent rise in new light vehicle sales for 2023 over the previous year. However, in 2024 that figure is set to drop to only a 2.8 percent increase.
The rising cost of living in many countries due to growing inflation and higher interest rates will still be front and center heading into 2024, which will no doubt hamper consumer demand for vehicles.
"2024 is expected to be another year of cagey recovery, with the auto industry moving beyond clear supply-side risks, into a murkier macro-led demand environment," Colin Couchman, executive director of global light vehicle forecasting for S&P Global Mobility, states in the firm's report.
As the largest consumer of lead, China’s economic health is also a factor for consideration. The World Bank is forecasting 5.2 percent annual growth in 2023 for China, the world’s second largest economy, and calling for slower growth of 4.5 percent in 2024 and 4.3 percent in 2025. The weakest segment of China’s market has been its property sector, with investment down 9.4 percent in 2023. Lead has several important applications in housing and infrastructure.
However, demand for refined lead metal in China is forecast to grow by 2.4 percent in 2024 after projected demand growth of 1.9 percent in 2023, according to ILZSG data. That’s compared to a significant 2023 decline of 6.4 percent in the US; a recovery of 3.1 percent is forecast in the country for 2024.
On a global scale, demand for refined lead metal is set to increase by 2.2 percent in 2024 after a 1.1 percent increase in 2023. Demand for lead is also expected to rise in India, Japan and Korea.
Despite these increases in demand, the ILZSG “anticipates that global supply of refined lead metal will exceed demand by 35,000 tonnes in 2023. In 2024, a larger surplus of 52,000 tonnes is expected.”
What other key trends and catalysts should investors look out for in the lead market in 2024?
“Stimulus policies in China will be a key short-term catalyst of demand for the metal. Timely and substantial support to the industrial and property sector would boost lead prices,” Solanes explained.
In mid-2023, China’s National Development and Reform Commission announced economic stimulus measures to spur growth in the auto, property and consumer goods sectors. Market participants will be watching for any impact they may have for the lead sector, as well as additional measures that may be on the horizon in 2024.
Over the longer term, the transition away from fossil fuels to renewable energy sources presents an avenue of demand in the lead market. “The main underlying trend to monitor is the switch to green and electric energy, as lead-acid batteries are widely used to power both low-voltage and renewable energy systems,” added Solanes.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Galena Mining is a client of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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