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.
Gold prices creep lower as dollar, yields surge on hawkish Fedspeak
Investing.com– Gold prices fell in Asian trade on Tuesday, facing consistent pressure from a stronger dollar and higher Treasury yields as Federal Reserve officials reiterated the bank’s outlook for higher interest rates.
Minneapolis Fed President Neel Kashkari said in an address on late-Monday that he saw rates rising at least once more in 2023, and that they were likely to remain higher through 2024.
His comments echoed those made by Fed Chair Jerome Powell last week, who said that sticky inflation and a tight labor market will likely elicit one more rate hike this year. Powell also downplayed expectations for a large band of rate cuts next year, with the Fed’s target rate through 2024.
The outlook for higher rates dented gold’s prospects, given that higher yields push up the opportunity cost of investing in the non-yielding asset. This weighed particularly on the outlook for prices, with gold futures losing more than the spot price in recent sessions.
fell 0.1% to $1,913.62 an ounce, while expiring in December fell 0.2% to $1,932.25 an ounce by 00:02 ET (04:02 GMT). Both instruments were at a 11-day low.
Dollar at 10-mth peak, yields hit 16-year high with shutdown in focus
Pressure on metal markets came chiefly from a stronger greenback, as the Fed’s hawkish rhetoric pushed the to its highest level in 10 months against a basket of currencies.
Treasury yields also surged in the wake of the Fed’s meeting last week, with the at its highest since 2007.
Growing fears of a U.S. government shutdown did little to deter the dollar’s advance, with higher rates also increasing the greenback’s safe haven appeal over gold.
Congress has less than a week to pass a spending bill and avert a shutdown. But both Republican and Democrat leaders indicated little progress was being made towards reaching consensus.
While gold is a safe haven, it has seen little actual gains during past government shutdowns. The 2018-2019 shutdown, which was the longest in U.S. history at 35 days, only saw a $20 appreciation in spot prices.
Copper prices dip, China jitters persist
Among industrial metals, copper prices extended losses on Tuesday amid persistent concerns over an economic slowdown in China, the world’s largest copper importer.
Sentiment towards the country was dealt a fresh blow this week as beleaguered property developer China Evergrande Group (HK:) said it will be unable to issue new debt due to a government investigation. This ramped up concerns over more regulatory scrutiny towards the sector, which is already struggling with a three year-long cash crunch.
The property sector is also a key driver of copper demand. fell 0.1% to $3.702 a pound, and were close to 1-½ month lows.
Focus this week is now on data from China for more cues on business activity.
Oil prices inch lower as Fed, China fears dent outlook
Investing.com– Oil prices fell slightly in Asian trade on Tuesday amid growing fears that higher-for-longer U.S. interest rates will weigh on demand, while renewed concerns over China’s economy also dented sentiment.
Strength in the put a damper on oil prices, as hawkish signals from the Federal Reserve saw the greenback scale a 10-month peak, pushing up crude costs for international buyers.
Markets also grew increasingly wary of more increases in U.S. rates, which are expected to weigh on economic activity this year and potentially hurt crude demand. The Fed had recently warned that higher energy costs, in the wake of surging oil prices, will likely buoy inflation and further the need for higher rates.
In addition to Fed-related headwinds, oil markets were also grappling with renewed fears of an economic slowdown in China, the world’s largest oil importer, as analysts soured further on its growth prospects this year.
The negative trends saw traders question whether oil prices had the capacity for more gains, especially after they surged to 10-month highs earlier in September.
fell slightly to $91.69 a barrel, while fell 0.1% to $89.58 a barrel by 21:04 ET (01:04 GMT).
China fears persist amid GDP downgrades, PMIs awaited
A string of major brokerages and investment banks- most recently S&P Global and HSBC- downgraded their outlook for Chinese economic growth this year, with analysts warning that gross domestic product could only grow 4.8% in 2023- lower than the government’s 5% forecast.
The downgrades come just a few days before key Chinese (PMI) data for September, which is expected to show continued weakness in business activity.
While PMI readings for August had shown some improvement in manufacturing activity, service sector growth declined through the month.
Fears of a meltdown in the China’s massive property market also came to fore this week after embattled developer China Evergrande Group (HK:) warned that it was unable to issue new debt.
While China’s oil imports have remained largely robust this year, the country’s appetite for fuel has struggled to reach pre-COVID levels. Beijing also set higher fuel export quotas for the year, indicating that local demand remained weak.
On the supply front, expectations of tighter fuel markets in the northern hemisphere were slightly dented after Russia said its planned fuel export ban will be somewhat less severe than initially expected.
But oil markets are still expected to tighten substantially this year, following deep production cuts in Saudi Arabia and Russia. U.S. rig counts were also seen dropping to a 1-½ year low last week, while recent data showed a consistent decline in .
JPMorgan analysts expect oil prices to trend between $90 and $100 in the coming year.
Oil futures retreat amid global economic concerns and potential supply increases
Oil futures, which reached a peak in 2023 due to Saudi Arabia’s daily cut of 1 million barrels and restrictions imposed by Russia, have started to decline due to global economic anxieties and the Federal Reserve’s persisting high rates. This development comes despite expectations of a record 13.1 million barrels and an anticipated supply deficit by year-end.
The peak earlier this year was primarily influenced by Saudi Arabia’s decision to reduce its oil output by 1 million barrels per day, coupled with restrictions from Russia. However, recent global economic concerns and the Federal Reserve’s continued high rates have led to a downturn in oil futures.
Robert Yawger, an analyst at Mizuho, highlighted potential increases in oil supply. These include possible contributions from Iran, Iraqi Kurds via the Ceyhan pipeline, Suriname, and Guyana. These potential additions to the supply chain are significant factors to consider against a backdrop of a previously predicted $150 oil forecast.
Despite the anticipation of a record 13.1 million barrels and an expected supply deficit by the end of the year, these potential increases in oil supply could balance out the market dynamics. The evolving situation underscores the influence of global economic conditions and policy decisions on commodity markets.
Overall, these developments indicate that while production cuts and restrictions had previously driven oil prices to their peak in 2023, current global economic worries and potential increases in supply are exerting downward pressure on oil futures.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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