CHANGSHA, Jul 24 (SMM) – With lead prices highly volatile amid COVID-19, consumption recovery is likely to happen in the third and the fourth quarter, according to SMM’s senior lead analyst Xia Wenming.
Xia was presenting her outlook on the China domestic lead market at the 2020 (15th) Lead and Zinc Summit held by SMM at Changsha, China.
The lead industry chain has changed from stagnation to recovery over the first half of 2020. Import volume of lead concentrate stood at 461,000 mt in Janurary to May, a year-on-year decrease of 22%. Production of lead concentrate in high-altitude areas in Q3 is on the rising trend. Ore imports were eased and supply of lead concentrate was tight.
Export of lead-acid batteries from January to May in 2020 was 57.8 million units, with a year-on-year decrease of 11.7%, and exports of lead-acid batteries have recovered significantly in May as Europe, the United States and Southeast Asia gradually re-opened their economies.
Consumption has recovered in Q2 after COVID-19 is controlled in China, and lead prices rose gradually. Xia noted that consumption of lead-acid batteries is affected by local government policies, as well as infrastructure development and export demand in Europe.
“Operating rates in Q2 was comparable to the peak period of Q3 in previous years, and there is a possibility that operating rates in Q3 this year will improve amid the peak season,” Xia said.
Xia said that the outlook of lead prices in the H2 2020 will be dependent on consumption. “Consumption during the traditional peak season of Q3 will be a key factor of price increase. At the same time, the new addition of secondary lead capacity will continue to interfere with price movements.”
