What Allows China Lead Prices to Hold Firm despite $70/t Slump in LME Lead?

SHANGHAI, Mar. 19 (SMM) – Lead prices fell by nearly $70 per tonne on London Metal Exchange March 13-17, while prices in China’s physical lead market only edged down 50 yuan ($8.1) per tonne. What has bolstered lead prices in China? Will the prices continue holding firm?

Motive battery sales exceeded forecast after Chinese New Year, SMM understood, with supply falling short in some regions. The robust consumption encouraged lead-acid battery production, in turn boosting lead demand.

On the supply side, environmental protection efforts left many secondary lead smelters closed, tightening supply of the material.

“Unlicensed secondary lead makers in Shandong and Henan put off resumption plans due to stricter environmental protection requirements, and some others only watched from the sidelines against depressed lead prices,” SMM’s analyst Zhu Rongrong said.

Meanwhile, increased stoppages at primary lead smelters triggered concerns over a shortage in primary lead.

Stronger demand and potential deficit proffered support to lead prices in China.

However, Zhu added that whether the upturn in battery demand will be sustainable remains to be seen, and this may add to uncertainty over China’s lead price outlook.

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