Heavy metal prices rose by 4% only during the last trading session, but even that is not enough to offset the 14% decline since the beginning of 2022. At the end of the previous trading session, the London metal exchange lead price rose by 3.57% to $1,993 per ton. 

At the same time, according to TradeEconomics, lead has fallen by $322.75/ton, or 13.81% since the beginning of 2022. The outlook for the metal is heavily influenced by expectations of a recession in the global economy, which will reduce consumption of industrial metals in general. There was also a rise in lead metal prices in India. 

Metal lead price adjustment

80% of modern lead is used in the manufacture of batteries. Lead is also often used to clad tanks where corrosive liquids are stored, and as protection against X-rays and gamma rays. Australia, China and the United States are the largest producers of lead, followed by Peru, Canada, Mexico, Sweden, Morocco, South Africa and North Korea. 

Lead is also used in the construction industry and in the manufacture of munitions, fuel tanks, and pipelines. Because of its catalytic properties, lead is also used to convert chemical energy into electrical energy. However, in addition to all these advantages, lead has one significant disadvantage: It is very harmful to human health.

Lead will remain under pressure

After plummeting in June, the price dynamics on the market stabilized. Since early July, the price of LME lead futures has risen by 4.8% m/m to $1,998.5 per ton.

June saw an improvement in the Chinese auto market, which supported the lead market. Auto sales rose 23.8% YoY to 2.502 million units. Production was up 28.2% y/y to 2.499 million (CAAM data). This boosted demand for batteries and the secondary supply of lead.

In Europe and the U.S., the market for the metal remains tight – influenced by declining production due to expensive energy. Also, lower car production is limiting consumption. Auto sales in the EU fell 15.4% in June to a record low for the month (ACEA). Supply chain problems continue to limit car production.

At the same time, lead premiums in the European and American markets remained high and consumption in Europe showed a slight rebound –

Metal inventories at the LME are down 0.8% since the beginning of July, while lead prices at the Shanghai metal exchange are up 14.1%. 

In the coming months, the lead market will remain under selling pressure due to the mass exodus of investors from the commodity markets because of changes in regulatory policies and expectations of a slowdown of the global economy. We can expect a small recovery in prices by the end of the year due to seasonal factors. 

Metal lead price adjustment: Market is waiting for macroeconomic signals

Conditions were not too positive on Tuesday, July 19, before the opening of lead trading in London. Copper prices are down 0.5%, and European stock indices are also down 0.6-0.7%. All this suggests that the three-day bounce in lead prices of 8.5% from 1840 to 1998 dollars per ton we’ve seen since last Thursday will be interrupted today by a sensitive 0.5-0.7% drop in prices.

The main negative sentiment in the lead market continues to be fears of a global recession, exacerbated by persistent outbreaks of SOVID-19 in China. Given the zero tolerance policy of the Chinese authorities, this leads to expecting a double decrease in demand – both because of the global economic slowdown and, additionally, because of the epidemiological stoppages in the economy of the world’s largest consumer of lead (China accounts for 40% of global consumption of this metal).

Likely the reduction of lead prices will continue at least to the level of $1,600 per ton. This is another minus 20% from the current level of 1998 dollars per ton. This week, we can expect quotations to test last week’s lows of $1,850-1900 a ton again, and next week, in case this zone is broken down, the fall to the mid-term target will go on.