No one has really been talking about lead this year. The metal, with relatively “boring fundamentals,” hasn’t really caught investors’ eye this year. Especially, when its metal cousin zinc is getting all the attention.
However, if you are a lead buyer, don’t wait until this metal gains popularity, because it might be too late. Perhaps this metal hasn’t really made it to the front pages yet, but it’s worth paying attention to. Sometimes, a metal can rise significantly in price before the bullish story becomes clear.
That’s what seems to be happening with lead. The metal hit a new 14-month high last week. It’s up over 20% since January.
According to the International Lead and Zinc Supply Group (ILZSG), lead’s surplus shrank in July. Still, for the first half of the year, refined lead metal supply slightly exceeded demand by 37,000 metric tons. Over the same period last year, demand exceeded supply by only 14,000 mt.
While lead’s fundamentals look neutral at best, we already warned that a rising trend in the metal complex could add fuel to lead prices as well. Lead prices are being driven by funds’ increasing appetite for industrial metals. This means that even though lead fundamentals don’t look overly bullish, the wind is now blowing at lead’s back. Funds are either seeing a tightening in the fundamentals that we can’t see yet or they are simply buying metals as sentiment in the industrial metals complex has improved, as we noticed back in April.
What This Means For Metal Buyers
Pay close attention to the performance of the metal complex as a whole. Don’t narrow your view to the specific industry fundamentals of lead, which still look neutral. Lead buyers might want to take some risk off the table.