LONDON, Jan 31 (Reuters) - A cold snap in Europe has come too late to kick-start demand for battery material lead after a milder than usual start to winter in the Northern hemisphere dampened demand in the first quarter.
Consumers have also been reluctant to buy more lead to add to stocks built up last year.
Demand for lead usually picks up in cold weather when batteries, which make up 70 percent of lead demand, tend to fail and need replacing, but the mild start to winter in Europe and North America means the metal is likely to miss its seasonal fillip.
"In terms of the winter battery season, it's coming a little bit too late now. Consumers would usually be looking through to February, if it had been a cold winter, to do some restocking but I have the impression that it's not really the case this time around," said Neil Hawkes, analyst at CRU.
"The concern is that consumers will just allow stocks to run down. They should be able to meet any late surge in battery failures from stock rather than needing to replenish lead to produce more batteries."
Reflecting the weak start to the year, European premiums for exworks producer grade 99.97 percent pure secondary lead PB-EXWP-EU, paid above the LME cash price, slipped to $50-70 against $60-80 quoted at the end of December, traders said.
They said battery producers were reluctant to buy on the spot market, even if the weather turns colder, as they were adequately stocked in preparation for a cold snap after previous winters had been colder than usual.
Stocks of refined lead held by consumers were at 98,900 tonnes in November last year, data from the International Lead and Zinc Study Group showed, roughly in line with stocks held at the end of 2010.
"That (mild winter) on its own doesn't turn the lead story bearish but it certainly moderates how bullish you can get about lead given that so far we have not seen the weather supporting the demand story," said Nicholas Snowdown, analyst at Barcap.
Late winter and early spring are to see colder than average weather across the UK and in parts of western Europe and Norway, while the rest of Europe will see above-normal temperatures, Weather Services International (WSI) said last week.
Analysts said the slowdown was exacerbated by a lack of Chinese buying due to the Lunar New Year holiday, but demand was unlikely to collapse as China still needed to make up for some capacity lost from lead-acid battery plant shutdowns last year.
"Because of what happened last year, there's still a need to replenish stocks to some extent so I think that's going to be a part of Chinese demand picking up a little bit more than it otherwise would through the second quarter," Hawkes said.
China's authorities launched a crackdown on lead-acid battery plants last year after incidents of lead poisoning were traced back to a large factory in Zhejiang province.
Industry sources said most of the medium and large-scale plants that were shut down have now reopened, prompting smelters to raise production to satisfy pent-up demand.