LEAD-Major market developments in November
Reuters
Reuters - Saturday, December 11
sg.news.yahoo.com
LONDON, Dec 10 - Demand for lead may get a boost from the recent cold weather in northern Europe and the market looks set to be tighter next year as consumption is expected to be stronger across the board.
Lead-acid batteries in cars are much more prone to failing in extreme weather such as harsh winters and hot summer.
"The winter weather has come early and if it lasts long enough it could get interesting if consumers, who have been holding low inventories start to get worried and restock," said Neil Hawkes of industry consultants CRU Group.
The situation in Europe has been exacerbated by a production halt at a large lead plant in Germany, although the overall impact on supplies is not expected to be that significant. [ID:nLDE6AT1R5]
Independent consultant Angus MacMillan expected the winter weather to offer some support to prices near term.
But he still did not rule a pull back towards $2,200 a tonne in the next month or so before the market set its sights higher again.
At 1226 GMT the London Metal Exchange three-months lead price <CMPB3> was indicated at $2,430 a tonne.
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Analysts expressed surprise that LME warehouse stocks of lead <MPB-STOCKS> have been on a rising trend throughout much of this year.
On Friday they stood at 204,375 tonnes, just shy of the 205,450 tonnes seen last month, when they were at their highest in around 10-1/2 years.
Huw Roberts of consultancy CHR Metals said this trend suggested the recovery in demand outside China had fallen short of earlier expectations.
Looking ahead, Chinese consumption would remain very robust, underpinned by sales of batteries for cars and e-bikes, according to Roberts.
"We see the market tipping into a very modest deficit next year, but against a background of reasonably high stocks no-one is going to go short of lead," he said.
Below are some of the more significant recent developments in production, stocks and prices that may continue to influence the direction of the market in the remainder of 2010 and into 2011.
PRODUCTION:
Nov 30 - German lead plant Weser-Metall GmbH has stopped production following an accident, a statement from its French parent Recylex <RXPA.PA> said. The plant produces 135,000 tonnes annually from both lead concentrates and lead scrap. The company said it had declared force majeure on lead deliveries from the plant, but that it was seeking to cover the urgent needs of clients from its available stocks. Recylex said it hoped to resume output in mid December 2010.
Nov 17 - The global lead market was in surplus by 41,000 tonnes in the first nine months of the year, a monthly bulletin from Lisbon-based International Lead and Zinc Study Group showed. Global refined lead use was 6.674 million tonnes, compared with 6.362 million in January to September 2009. World refined lead output was 6.715 million tonnes, up from 6.432 million a year earlier. [ID:nLDE6AG11H]
Nov 13 - China's refined lead production in 2010 will still rise, despite a reduction in output by some smelters in Henan due to power supply cuts, an analyst at state-backed research firm Antaike said. Production and consumption of refined lead in the world's top producer and consumer of the metal are expected to rise this year and next year, causing surpluses in the domestic market. [ID:nTOE6AC01Z]
Nov 11 - China produced 3,482,000 tonnes of refined lead in the first ten months of the year, up 6.4 percent from a year earlier, according to the National Bureau of Statistics. Output of mined lead rose by 33.2 percent over the same period to 1,831,000 tonnes. [ID:nAPI000623]
PRICES
Lead prices ended November at $2,230 a tonne, from $2,449 at the end of October.
Following LME benchmark copper and boosted by strong Chinese economic data, prices surged to $2,650 a tonne on Nov. 11, their highest since early January.
But they fell sharply after on mounting fears that China may take aggressive action to curb inflation. Eurozone debt worries also stoked investor worries about demand for industrial metals.
On Nov. 17, three-months lead dropped to $2,150 a tonne, its lowest in almost two months.
While the market recouped some of those losses, metals markets were unsettled again by geopolitical tension on the Korean peninsula.
Upbeat U.S. economic data revived more upbeat sentiment across metals.
A broad-based charge in the base metals complex followed news that U.S. President Barack Obama had reached an agreement to extend the Bush-era tax cuts for two years. But lead's gains were rather muted.
On Dec. 7, lead prices rose to $2,447.75 and held firm, bolstered by new record highs in the copper market.
In July, the twice-yearly Reuters base metals price poll [MET/POLL] put the median average for the LME cash lead price <MPB0> at $1,996 a tonne, down from the January forecast of $2,252.
STOCKS
LME lead stocks did what they had threatened to do for some time in November, piercing the psychologically significant 200,000 tonne level.
They finished the month at 203,875 tonnes, up from 199,725 tonnes at the end of October.
On Nov. 12, inventories reached 205,450 tonnes, their highest in around 10-1/2 years. They have since edged lower on the whole, with shipments leaving a diverse range of locations.
Recent cold weather in Europe has raised expectations of higher demand for lead from the replacement battery sector.
At the end of November LME lead stocks equated to almost 8-1/2 days of demand.
Western world commercial stocks totalled 433,500 tonnes or 4.9 weeks of demand at the end of September, compared with 432,100 tonnes or 5.0 weeks the previous month and 388,000 tonnes or 4.0 weeks at the end of 2009.
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