Market Briefing - July 21, 2008

At the time of our last update (June 30), lead prices were trading at around $1,700/tonne. However, prices have recently rebounded on the back of some bullish news (Bulgaria’s reduced target of lead output in 2008), exceeding $2,000/tonne in mid-July. The lead cash quote had slipped below $1,550/tonne in early July – the lowest price since November 2006. The market has also been supported by a decline in LME inventories, which have fallen from a peak of 101,175 tonnes on July 9 to 92,025 tonnes on July 21.

Mine output registers an improvement
According to ILZSG, the concentrate tightness, which was particularly significant last year, has eased. Global mine output increased by 8.4% y-o-y to 1.54m tonnes in the first five months of the year, with May also registering a notable increase from the previous month. Mine output has now increased for the third consecutive month. GFMS Metals Consulting expects the pace of concentrate production to pick-up over the remaining Q3 and Q4. This, in turn, should allow the rate of refined output to increase, which will increase the rate of inventory accumulation. We forecast global mine output to increase by 9.3% to 3.94m tonnes in 2008.

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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.