It was surprising to see that the prices of Lead only registered marginal gains when its peers like Zinc, Copper and Nickel remained outperformers all thorough October. Meanwhile Lead was mostly been contended with lower demand outlook and higher surplus scenario. The sharp rally seen in August and September months were missing during October and initiation of November. The news of Lead smelters being shut and supply hampered got discounted which affected the daily price movements adversely. Prices of Lead shot up during September when China shut down its smelters on the news of Lead poisoning in major production areas. But in current situation stockpiles in China have been more than the usage which has brought the prices to remain sideways. Estimates are that the at least 300000 tonnes of Lead is in stockpiles in China. This has helped offsetting the deficit due to poisoning incidents. However, the Lead prices registered meager gains during the month ended October. The prices tested a high of LME at $ 2436 per tonne on 22nd Oct 2009 and a low of $2109 per tonne on 2nd Oct 2009 with an overall rise of 5.6% in the month. In the first four sessions of November the prices have been range bound. The market breadth suggest that the prices of Lead will be under some sort of stress in coming days and the rise if any will be limited and short lived.
World refined Lead market in surplus-
The global Lead market was in surplus of 57000 tonnes in the first eight months of the year (Jan-August 2009) as per the latest monthly report from International Lead and Zinc Study Group (ILZSG). According to the report during the first eight months of 2009 world refined Lead metal usage was 5727000 tonnes up 0.1% as against 5721000 tonnes during the corresponding period previous year. The world Lead refined output for the period of Jan-August 2009 was 5784000 tonnes up 1.6% as against 5692000 tonnes for the corresponding period previous year. World Lead mine output declined by 1.7% to 2533000 tonnes as against 2578000 tonnes in Jan-August 2008.
Australia, Peru, and Canada registered declines in refined metal output but that was offset by increase of production in China, Bolivia and Mexico. Chinese apparent Lead usage increased 26.5%. The total net imports of refined Lead in China during the period of Jan- August 2009 was 1420000 tons compared to a meager 14000 tonnes of refined imports during the corresponding period pervious year.
The latest forecasts by ILZSG suggest that the global refined lead metal usage is forecasted to increase by 3% to 8.91 million tonnes in 2009. For the year 2010 the usage is expected to increase further by 7.2% to 9.55 million tonnes. Demand will be severely hit by the recessionary conditions. The demand from US is expected to come down by 4.9% in 2009, however this will be followed by a increase of 2.5% in 2010. The demand from Europe will be worst hit and expectations are that the same will decline by 15.6% in 2009; this will be its lowest level in more than 50 years. In the year 2010 the demand is expected to increase by 8.8%. China will remain the key driver of growth of demand of refined lead. In China growth is forecasted to increase by a whopping 25% in the year 2009 while in 2010 the growth is expected to increase by 7.8%. China will be accounting for 45% of the total world demand in the year 2010.
Global Lead mine production is expected to increase by 1.3% to 3.94 million tonnes with further increase in China. For the year 2010 the mine production is expected to increase by 5.8% to 4.17 million tonnes. World refined metal production is expected to increase by 3.4% to 8.99 million tonnes, this is forecasted to increase further by 7.4% due to commissioning of new plants in India and Brazil and higher production in China, Germany, Italy, Japan and US.
Indian primary Lead production misses production targets
Indian primary Lead production missed actual production targets by more than 33.3% in the month of September. Total production during the month of September was 4422 tonnes as against a production target of 6637 tonnes from Hindustan Zinc. Indian Lead is gearing up for production from its plants at Thane and Kolkatta and therefore the production was not reported. Total installed capacity for Indian Lead is 24000 tonnes. During the period of April-September total production of refined Lead was 26783 tonnes down by 10.2% from the corresponding period of 2008. Cumulative production for the period of April-September 2009 also missed the production target by 24% or 35203 tonnes.
Range trading in domestic markets
The metal used in batteries has run up 126 percent on LME so far this year. In October the prices have gained by 5.6 percent to $2345 per tonne on 30th Oct 2009. In November prices have averaged $ 2310 per tonne. The inventories levels are on a higher side as well. The stockpiles have rose by 3025 tonnes or 2.36% since October to 130800 tonnes on 6th Nov 2009. In Domestic futures markets, MCX Lead prices were in the range of Rs 98-114 per kg during October and few sessions of November. The benchmark contract faced dip during the initial period of October from where it saw consolidation. The prices saw spikes during the end of October because of fall in the value of Dollar against the EURO.
Outlook:
Lead prices are expected to remain range bound during November with negative bias. The demand for Lead is anticipated to face a hit due to fall in the usage of e-bikes in China. China is the main consumer of Lead in the world but due to start of winters the demand for e-bikes are expected to slow down, which will be reducing the usage of Lead. The official data from the China is forecasted to show a decline in the total sales of the e-bikes in the month of October. However the demand for passenger cars is expected to remain constant which will be assisting batteries demand to fall drastically. The stockpiles in China as well as rest of the warehouses across the globe are high which will ensure that every rise in the prices will be facing supplies. In domestic futures market Lead prices will be hovering between 117 per kg. This is the same range in which Lead kept trading in all through October as well.
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