SHANGHAI, Oct. 30 (SMM) – Lead market is expected to swing in a wide range in 2018 and will say goodbye to relatively stable movement, like a small change of 25-50 yuan per tonne, SMM lead analyst predicts at China Nonferrous Metals Industry Annual Meeting 2017 & SMM Nonferrous Metals Price Forecast Release 2018 in Shanghai.
Followings are major stories in lead market at the meeting, organized by SMM, co-organized by SHFE and sponsored by JHC and Crystal Energy.
Supply: Lead Concentrate Supply Remains Tight, and Primary Lead Output Restricted
Supply in lead concentrate market is expected to remain tight despite newly-increased/expanded projects both home and abroad, and ore shortages will also restrict the output growth of primary lead, which is expected to hold largely stable.
In the secondary lead market, focus should be on environmental protection policy in China. Chinese government has strengthened its efforts on environmental protection inspections, so the trend will be more and more stringent, but rigorous measures may be periodic.
China’s secondary lead output is estimated to grow stably in 2018, and this will offset the possible output decline in primary lead market. Hence, no big problem will be seen in lead supply in 2018.
Demand: to Hold Stable or Grow Slightly
Motive battery: the market remains in supply surplus and is a saturated one, and a huge amount of e-bikes will continue releasing demand, but the positive factor will be waning gradually with new output declines in recent years. Lead consumption from motive battery market will fall slightly in 2018.
Ignition battery: auto production and sales are on the rise, so demand will keep growing stably in 2018.
Back-up battery: Construction of 4G base stations in China is at the final stage, and market expectation over new ones is reducing, so lead consumption from 4G base stations will be falling. But, 5G construction will bring about market hope for new projects in 2019 and 2020.
To sum up, demand from lead-acid battery market is expected to hold largely stable or grow slightly in 2018.
Positive and Negative Fundamental Factors for Lead Price in 2018
Positive Factors
- Ore supply remains tight, and this will curb primary lead output growth.
- Stringent environmental protection policy will standardize and optimize secondary lead industry structure, and the potential output decline during the transition period will support lead price.
- New growth potential in battery market.
Negative Factors
- Lead smelting capacity is in surplus, and the condition will not improve in the short term.
- Domestic large secondary lead smelters, with production licenses, are expected to commission new projects in large amounts in 2018.
- The rapid development of new energy market, and replacement of lead-acid battery by Li-ion battery.
2018 Lead Price Forecast
In 2018, China’s lead supply is expected to grow, while demand will be also on the increase, but at a slower pace. Hence, China’s lead market will remain in supply surplus in 2018. Environmental factor and uncertainties in secondary lead market will add to price volatility in lead market.
In 2018, SMM expects low-end price on the SHFE lead will be 17,000 yuan per tonne, and 22,000 yuan per tonne at the high-end, and will reach the peak in 3Q or 4Q 2018.
Note: This article is just part of keynote speech during the conference. For more information on SMM exclusive data and survey, please subscribe to SMM China Lead Industry Chain Annual Report. Contact: Liu Xiaoxia; Tel: 021-51666822.
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