Market Briefing - May 18, 2009

Lead prices continued to rise over the course of April, peaking at $1,525 around mid-month. Interestingly, since late February the metal has been the best performer among LME metals, with a trough-to-peak rise of 54%, even higher, albeit at the margin, than the growth copper prices experienced over the period. Since mid-April the metal has held onto the bulk of its gains. The generally benign fundamentals of the market were undoubtedly in large part responsible for this, as was the fact that prices had previously arguably overshot their decline.

Reported stocks of lead increased somewhat over the course of April, with LME inventories rising by 10,700 tonnes. 96% of the increase occurred in two days, with stocks over the rest of the period being broadly flat overall. There has been little change in LME inventories in May, with stocks hovering around 73,000 tonnes. Once again, it is worth reiterating that LME stocks as represented by the number of weeks of Western World consumption (less than one week) is by far the lowest of the Base Metals complex.

Consumption falls but only modestly
The latest bulletin from the International Lead and Zinc Study Group (ILZSG) suggests global refined lead consumption in January and February fell by 4.2% y-o-y to 1.292m tonnes. The decline occurred almost exclusively in “Western World” countries, where consumption was down 9.6%. The initial ILZSG figures suggest that US consumption fell by 8% y-o-y in the first two months of this year, after a somewhat surprising 3.8% advance last year. The data on battery shipments from the Battery Council International highlights the importance of the replacement battery market. In 2008 replacement battery shipments rose by 1.2% to 99m units, helping offset a 14% decline in OE battery shipments to 14.28m units. Similar, but slightly more extreme, trends have been seen this year, reflecting the collapse in vehicle output in the region. Replacement battery shipments rose by 3.4% y-o-y up to February, to 15.4m units, while OE shipments were down 41.8% to 1.82m units.

> This article gives the introduction to our latest detailed analysis on the market. To access our latest detailed monthly report on the base metals markets plus the recent briefing update, click on the links below.

> Base Metals Market Briefing - December 9, 2008.

> Base Metals Market Briefing Update - December 16, 2008.

Disclaimer: Whilst every effort has been made to ensure the accuracy of the information used in this document, GFMS Metals Consulting cannot guarantee such accuracy and GFMS Metals Consulting does not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this information.