Tag: lead price

Automotive MMI: New-vehicle retail sales in U.S. forecast to rise for second straight month

Automotive MMI: New-vehicle retail sales in U.S. forecast to rise for second straight month

The Automotive Monthly Metals Index (MMI) gained 3.3% for this month’s MMI reading, as October 2020 auto sales made gains on a new-vehicle retail basis. The MetalMiner 2021 Annual Outlook […]

Supply-side worries are supporting the zinc, lead and copper prices

Supply-side worries are supporting the zinc, lead and copper prices

Zinc and lead are co-mined metals, often assessed in tandem. Zinc and copper, however, are less likely to be viewed as driven by the same fundamentals. Sentiment, yes. All the […]

Lead Prices Will Trade at $2,800 By Year’s End

[caption id="attachment_83404" align="aligncenter" width="500"] The 3-month London Metal Exchange lead price is still climbing. Source: Fastmarkets.com.[/caption]
Lead has had a pretty wild ride over the past few months. After a big run in 2016, prices sold off in December, offering buyers a great opportunity to buy the metal as prices pulled back.
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Prices are now back near new highs as bulls seem to be taking control again. For reasons we’ll see below, we expect momentum to pick up again on the upside.
[caption id="attachment_83405" align="aligncenter" width="500"] Global Lead Refined Production and Usage. Source: MetalMiner IndX.[/caption]
According to the International Lead and Zinc Study Group, in 2016 refined lead supply exceeded demand by 11,000 metric tons in the global market.

Lead Supply Falls, Huge Price Volatility Ahead Despite Strong Demand

The ride of lead prices over the past few weeks reminds me of a day at Cedar Point. If you like amusement parks you have to check out the Point.
[caption id="attachment_82919" align="aligncenter" width="500"] 3-Month London Metal Exchange Lead rebounds after a sharp drop. Source: MetalMiner analysis of Fastmarkets.com data.[/caption]
Lead prices surged in Q4, but prices increased too fast. With prices overextended in late November, a correction was of little surprise.
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Prices fell sharply in December, bringing a great opportunity for buyers to purchase metal near support levels. A tightening market and recent weakness in the dollar pushed the metal higher in January.

Tightening Market

[caption id="attachment_82920" align="aligncenter" width="500"] Lead refined production vs. usage. Source: Metalminer analysis of ILZSG data.[/caption]
The latest International Lead and Zinc Study Group data showed a tighter supply/demand situation. The lead metal supply exceeded demand by only 16,000 metric tons during the first 11 months of 2016.
In addition, global lead mine production fell 7.5% over the first 11 months of 2016 compared to the same period in 2015. As mine output falls at a faster pace than refined output, this should eventually lead to a depletion of concentrate stocks. Meanwhile, strong U.S. and Chinese auto sales in December bode well for lead’s demand.

When To Buy Lead

The lead supply/demand demand picture is not as bullish as zinc’s. However, lead’s production is falling and, in the context of a bull market in the industrial metals complex, we can expect prices to at least remain supported above $2,000.
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On the other hand, given the increase in price volatility, it might take some time before prices overcome their peak in late November. Buyers can expect some range-bound trading ($2,000-$2,400) in Q1.

Lead in My Stocking? Buy Base Metals For Christmas At the Right Time

I get it, you are thinking of what you are going to get your family for Christmas. However, Santa is bringing you good opportunities to buy some metals. Don’t miss them.

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Base metals entered a bull market earlier this year. The real driver of this bull market has been the stronger-than-expected Chinese demand. Markets underestimated Beijing’s determination not to disappoint on its growth numbers. Thanks to the country’s increase in infrastructure spending, industrial metal prices are getting a tailwind.

The metals rally particularly extended in November. However, prices don’t just move in a straight line. If they move up quickly, buyers are tempted to take their profits until markets digest those gains. This is normal price action and why we normally see prices moving in a zig-zag. In the second half of December, there’s already been some profit taking and as prices pull back, buyers can find good opportunities to time some purchases. Let’s take a few examples:

Copper

[caption id="attachment_82486" align="aligncenter" width="500"]Copper prices could find support soon Copper prices could find support soon. Source: MetalMiner analysis of Fastmartkets.com.[/caption]

Almost no analyst was bullish on copper prior to this rally, but it seems that the market now sees the possibility of a market deficit next year as almost no supply is due to come on-stream while demand seems robust.

Copper prices exploded in November. After this stellar rally it was normal to expect some selling pressure. However, if the bulls are still in control, they should come back to support prices soon. If prices start to rebound from these levels, copper buyers will find a good opportunity to buy some volume.

Zinc

[caption id="attachment_82490" align="aligncenter" width="500"]Zinc prices pullback near support levels Zinc prices pullback near support levels. Source: MetalMiner analysis of Fastmarkets.com data.[/caption]

According to the International Lead and Zinc Supply Group, the global market for refined zinc metal was in deficit by 277,000 metric tons from January to October 2016 with total reported inventories falling by 53,000 mt over the same period. The Group anticipates that global usage in 2016 will exceed production by 349,000 mt and expects the market to remain in a deficit of 280,000 mt next year.

During this year’s rally, zinc buyers had several opportunities to buy forward. Buyers now need to pay close attention to the recent price pull back. If you see a rebound in prices near that support level, that would be a good time to buy some volume.

Lead

[caption id="attachment_82491" align="aligncenter" width="500"]Lead prices pullback near support levels Lead prices pullback near support levels. Source: MetalMiner analysis of Fastmarkets.com data.[/caption]

Zinc’s cousin, lead, is also retracing near an area where we should see investors coming in to support prices. If this year’s bull market is set to continue, which for now we continue to expect it to do so, lead buyers will find a good opportunity to time their purchases if prices rebound at these levels.

Nickel

[caption id="attachment_82492" align="aligncenter" width="500"]Nickel prices pull back near support levels Nickel prices pull back near support levels. Source: MetalMiner analysis of Fastmarkets.com data.[/caption]

The Philippines’ output of nickel ore fell 16% in the third quarter from a year earlier, as a result of several mine suspensions due to environmental violations. The country has already stopped work at 10 of its 41 mines, eight of which are nickel mines. 20 More mines, 14 of which mine nickel, could see their licenses suspended.

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In December prices are retracing, but if this uptrend is to continue investors will likely find these levels attractive to buy nickel, lifting prices.

What This Means For Metal Buyers

Once you identify you are in a bull market, buying in the dips is usually a good strategy to satisify some of your metal requirements. As metal prices pull back in December, metal buyers might find good opportunities to time purchases if momentum turns upwards again.

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