Lead prices will likely rule stable in the second half of 2023 despite a nearly 10 per cent decline since the beginning of this year as the market is seen fairly balanced.

“The global lead market was fairly balanced over the first half of 2023 and we expect this to persist over the coming months. Weak production in major demand centres such as Europe and the US will continue to be offset by refined lead exports from China,” said research agency BMI, a unit of Fitch Solutions.

According to World Bank’s Prospects Group Senior Economist Jeetendra Khadan and research analyst Kaltrina Temaj, lead prices are expected to fall by less than 5 per cent this year. Their estimate in based on the recovery in supplies.

Price forecast

“We expect lead prices to remain fairly stable over the second half of 2023. As a result, we maintain our 2023 average price forecast at $2,150/tonne, which would be similar to the $2,145/tonne average in 2022,” BMI said in its outlook for lead. 

On Thursday, lead three-month contract on the London Metal Exchange was bid at $2,127, while spot lead was bid at $2,118. Prices averaged $2,114/tonne during January-July. “Our price forecast implies an average of $2,201 over the remainder of the year,” the research agency said.

Prices are expected to remain stable as weak production in major demand centres such as Europe and the US will be offset by refined lead exports from China. “Exports from China will be sustained by weak demand growth in the country,” BMI said.

Shanghai Metal Market (SMM) News said China’s output of secondary lead increased month-on-month by over 3 per cent to 3.75 lakh tonnes in July, though it was down over 5 per cent year-on-year. However, the production will be lower in August at 3.53 lakh tonnes on tight supply of battery scrap that is used for making secondarily lead.  

August ingot supply

SMM said August lead ingot supply will likely increase, mainly from the restart of secondary lead smelters and the commissioning of new ones. “With the background of increased supply, in addition to the pressure of lead ingot accumulation, it also promotes the competition of raw materials such as waste batteries to become white-hot,” it said.

BMI said China exported 46,000 tonnes of refined lead in the first quarter, up 25 per cent year-on-year. China became a net lead exporter in September 2021. Since then, it exported 95,000 tonnes of refined lead in 2021 and 116,500 tonnes in 2022, the highest since 2007.

Though China announced stimulus measures in July, it is far short of the policies adopted last year when the economy took a hit due to the Covid pandemic. The newly announced measures are unlikely to spur the economy in a big way, the research agency said. 

Bearish economic forecast

Outside of China, lead demand in Europe will be constrained by weak economic activity. “We maintain our view that the eurozone will enter a mild technical recession in H223, but we are now slightly more bearish on the economic outlook,” BMI said. 

The research agency sees the German economy contract by 0.6 per cent due to inflation and tight financial conditions, while Spain and Italy’s GDP are likely to grow by 1.4 per cent and 0.7 per cent, respectively. France’s GDP will increase by 0.5 per cent.

In the longer-term, BMI expects lead prices to gradually rise in the coming years. “We forecast an annual average deficit of 59,000 tonnes over 2023-2032 compared to an average surplus of 38,000 tonnes over the previous ten years,” it said.

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