The global lead market, having experienced a considerable 12% drop in prices this year, is poised to receive a shot in the arm from China’s burgeoning automobile industry. Analysts predict an upward trend for the remainder of the year, supported by a forecasted growth in global demand of 1.7%.
The main application of lead in the automotive industry lies in its use in batteries, alongside other uses in ammunition, weight belts, and soldering. Over the course of 2023, the price of lead saw a plunge of more than 12%, with a significant 5% decline witnessed in the previous month alone. The current quote for cash is at $2,060 a tonne, while the three-month contract stands at $2,072 a tonne.
According to the International Lead and Zinc Study Group (ILZSG), a UN-associated body, the demand for refined lead metal could grow to 12.53 million tonnes this year, pointing to an upward trajectory. On the supply front, lead mine output is expected to increase by 2.8% in 2023, mainly driven by Australia’s anticipated substantial increase in production.
The research firm BMI, a subsidiary of Fitch Solutions, has indicated that this surge in global lead demand may cause a slight global production deficit in 2023, reversing the significant surplus seen in 2022. China’s robust vehicle sales and production are predicted to be key contributors to this trend.
BMI expects lead prices to average $2,150 per tonne in 2023, in line with the prices from the previous year. The firm further indicated that environmental restrictions on lead mining and smelting may hamper production growth in the future, providing a floor for lead prices.
Recent analysis from ING Think, the economic and financial research branch of Dutch multinational financial services firm ING, revealed a marginal supply deficit of 19,000 tonnes in the lead market during Q1 of 2023. Meanwhile, Chinese demand is projected to rise by 0.7% in 2023, while similar increases are anticipated in India, Japan, the Republic of Korea, Mexico, and the US.
Furthermore, inventory of lead ingots in key Chinese provinces saw a significant increase, adding another 8,600 tonnes since early May. Despite potential dips in demand growth globally, accelerating lead demand in China due to its economic reopening is expected to underpin lead prices.
Despite the recent downturn, long-term forecasts for the global lead market remain undeterred. As the post-Covid recovery begins to lose momentum, growth in global refined production is predicted to taper off to 0.7% in 2023. BMI, however, anticipates a steady climb in lead prices over the coming years.
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