Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Fitch Solutions has forecast lead prices for 2021 at an average of $1,950/mt from previous prediction of $1,900/mt. In 2020, lead prices averaged to $1,837/mt, which was higher than its forecast of $1,800/mt. 


Fitch predicts lead demand to increase in China by 1pc in 2021 after contracting almost 7.5pc in 2020. However, demand will majorly be driven by other countries this year. Recoveries in vehicle production in key lead consuming markets such as India, US and South Korea will push demand in manufacturing lead-acid batteries.


The top five lead consuming countries (except China) account for almost 29.8pc of global consumption. This would help narrow the surplus production. Refined lead production balance would narrow to 534mn mt in 2021 from 673mn mt in 2020. Refined lead production is likely to increase during the winter season.


Operating rates of Chinese lead-acid battery producers have recovered broadly but producers are still operating at under 90pc capacity by the end of 2020, Fitch noted. This could lead to upside domestic consumption, thereby lifting prices in the coming year.


Higher global automotive production will also support lead prices. Auto production is forecast to grow by 5pc in 2021 after a contraction of 19.3pc in 2020, according to the report. Auto sector remains the largest consumer of lead in the form of lead acid batteries — used in conventional-fuel vehicles, some electric vehicles and solar energy panels for battery storage. 


For the long term, Fitch has revised prices upwards through 2021 given the narrowing production surplus. Also, refined lead production would increase gradually in the long term with surplus shifting to a deficit by 2029 with the supply used to manufacture EVs.


Indian Markets

Any change in primary lead prices leads to a change in prices of refined lead and remelted lead. For several months, prices have been in equilibrium on the back of firm demand in India from battery makers. No significant changes have happened on the demand or supply front, consequently, prices have risen only gradually over the months. However, domestic prices tend to be more sensitive to a price rise in global primary lead than to a fall in the prices. 


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