China sowed the seeds for lead’s recovery last year. With the premium of domestic China prices over LME prices during the first half of the year, China sucked in unprecedented tonnages of all the base metals. Imports of lead, however, saw the biggest spike, which, at its peak in April hit 36,357 tons, more than a 160-fold increase in year over year terms. Indeed, imports in that one-month alone exceeded imports for the whole of 2008 by 14%. LME lead prices bottomed out at a lowly $875/ton in December 2008, but rallied strongly reaching $2,460/ton in September a 181% rise. Since then, a combination of tightening bank lending requirements by China and comments made about the banks by the President Obama in a speech on Jan 21 have caused all the primary metals to fall.
But the fundamentals for lead remain good, even in the western world as demand for lead in batteries, the largest market segment by far for the metal, fell for use in new cars while it increased in replacement batteries as owners hung onto their cars for longer. Given that replacement battery sales outnumbered new car battery sales nearly 10 to 1 in 2009, the replacement market has greater influence on demand than new car sales. In addition, apart from a momentary hiccup towards the year-end when the market thought new legislation was coming out, the e-bike or electric bike market in China has continued to grow very strongly sucking in large volumes of lead. Given that China is usually a net exporter of lead, the surge of imports last year understandably impacted the market dramatically.
Where the price goes from here will depend on a number of factors that we cover in depth in our Lead Price Predictions price forecast.
To learn more about our price forecasts and research visit the Price Forecast section of the site.