Metal lead price as of today: lead not heavy enough to rise in price
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.
Brent crude oil futures its lowest since 2021 amid banking crisis
The cost of May futures on Brent crude oil fell to $72.74 per barrel, losing 0.31%, according to data from the ICE exchange. Brent was trading at about $70 a barrel at its low for the day. That’s a record low for at least 15 months, that is, since December 2021.
WTI prices are also falling, with futures prices down to $66.43 a barrel (-0.46% from last week’s close), according to the exchange. WTI was trading at $64.12 a barrel at its low for the day. This is also the lowest value since at least December 2021.
The market is thus responding to the banking crisis: since the beginning of March, three banks (Silvergate Bank, Silicon Valley Bank, Signature Bank) have closed their doors in the US, and the day before, on March 19, Swiss UBS took over its rival, Credit Suisse, buying the bank for $3.2bn amid fears of its collapse. Investors fear a recession, which may cause a crisis in the banking sector, as a recession, in turn, would lead to lower demand for fuel, the agency said.
“Oil prices are moving mainly because of fears [of further oil price dynamics]. Supply and demand fundamentals are almost unchanged, only the banking problems have an impact,” said Price Futures Group analyst Phil Flynn.
Oil prices lifted from daily lows helped the S&P 500 and Dow Jones indices, which rose Monday, writes Reuters. Traders raised their expectations that the U.S. Federal Reserve would refuse to raise rates this Wednesday to protect financial stability amid banking problems, the agency noted.
“Volatility is likely to persist this week, with broader financial market concerns likely to remain at the forefront,” ING Bank analysts said in a note. They add that the impending Fed decision adds to uncertainty in markets.
Earlier we reported that the price of Brent dropped below $75 per barrel for the first time in more than a year.
Gold prices will reach $2,075 “in the coming weeks”
Gold prices may continue to rise, analysts polled by the CNBC TV channel said. In their opinion, the difficulties of banks and a possible turning point in the policy of the Federal Reserve indicate the possibility of a new rise in gold prices.
“I think it’s likely that we’ll see a strong move in gold in the coming months. The stars seem to be aligned for gold, and it could soon break new highs,” said Craig Erlam, senior market analyst at brokerage Oanda.
The expert explained that interest rates are now at or close to their peak, and the market, amid recent developments in the banking sector, is laying on an earlier than previously expected start of rate cuts. They also added that this situation would boost demand for gold even if the U.S. dollar weakens.
This month, Fitch Solutions rating agency predicted that gold prices would reach $2,075 an ounce “in the coming weeks” amid global financial instability, writes RBC. The company also added that gold prices will remain at a higher than pre-pandemic levels in the coming years. Craig Erlam confirmed this forecast.
Other Wall Street experts are also predicting a long-term rise in gold prices. For instance, Tina Teng, analyst for British financial company CMC Markets, thinks that the U.S. Federal Reserve’s sooner departure from its policy of raising interest rates might provoke another rally in gold prices due to the weakening U.S. dollar and falling bond yields.
Earlier we reported that oil prices accelerated their decline, continuing a trend from the beginning of the week.
Analysts at U.S. bank Goldman Sachs revised its forecast on oil prices
Analysts at U.S. bank Goldman Sachs, one of the most optimistic forecasts about the cost of oil, changed its earlier forecast about the growth of oil prices to $100 in the next 12 months, Bloomberg said.
Now analysts predict that Brent crude oil will reach $94 per barrel in the next 12 months and $97 per barrel in the second half of 2024, the publication said.
The bank said oil prices have fallen despite rising demand in China, given pressure on the banking sector, recession fears and investor withdrawal.
“Historically, after such traumatic events, price adjustments and recoveries are only gradual,” the bank notes.
This week, the situation surrounding Swiss bank Credit Suisse triggered panic in the markets as oil plummeted to a 15-month low and Brent crude fell 12% to below $73 a barrel.
After the price decline, the bank expects OPEC producers to increase production only in the third quarter of 2024, contrary to Goldman’s forecast that it will happen in the second half of 2023. Analysts at the bank believe a barrel of Brent blend will reach $94 in the next 12 months and trade at $97 in the second half of 2024.
Bloomberg reported that the largest oil exporter, Saudi Arabia, announced higher April oil prices for markets in Asia and Europe.
Earlier, we reported that Iraq and OPEC advocated for guarantees of no fluctuations in oil prices.
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