Nickel, Lead, Zinc All in Surplus – When Will Markets Balance Out?

by on

In Part One of this two-post series, we looked at aluminum and copper markets, and how Q1 2012 counts of metal stocks show some sizable surpluses.

All the other base metals were in surplus during the first quarter — lead, for example, to the tune of 10,900 tons, building on a surplus of just 3,600 tons for the whole of 2011. Underlining the state of the market, global stocks rose with LME inventory some 25,500 tons higher at the end of March 2012, compared to end of December 2011, in spite of global refined metal production falling by 155,000 tons January-to-March 2012 from the same period last year.

Consumption dropped even more, down 166,000 tons according to the WBMS, and this time China also played a part with consumption, down 16 percent from last year reflecting weaker automotive and e-bike sales.

The 161,000-ton surplus in the zinc market between January and March this year shows an increase even on last year’s surplus of 540,000 tons for the whole of 2011. The LME now holds some 74 percent of global inventory, showing it is truly the market of last resort for producers of a metal in surplus. China consumes some 44 percent of global production, but much of its imports, which have fallen only marginally this year, come from other Southeast Asian markets. The WBMS cross-references export data from Japan, South Korea, Taiwan, etc. to correlate the Chinese import figures, supporting the picture of Chinese imports remaining at historically high levels.

Reports of slowing stainless production both in Europe and Asia are supported by WBMS reports of rising surplus’ in the Nickel market. Jan to March production exceeded apparent demand by 6,200 tons compared to a surplus of 8,600 tons for the whole of 2011. Mine production during Jan to March was up 98,200 tons above the same period in 2011 but so too was consumption up with apparent demand increasing by 46,700 tons, some of the surplus finding it’s way into increasing LME stocks up 8,300 tons over the level at the end of 2011.

Finally, the only market the WBMS judges to be in broad balance is tin, with just a fractional deficit of 100 tons during January-to-March this year. Chinese demand appears to be still buoyant, with demand rising 13.8 percent over the same period in 2011, but this was compensated by falling demand elsewhere — Japan, for example, down 23 percent over the same periods.

Anyone interested in further production, consumption and inventory change data should contact the World Bureau of Metal Statistics at

Leave a Comment

Your email address will not be published. Required fields are marked *