A nasty lead surprise?
theaustralian.news.com.au
Robin Bromby | August 13, 2009
Article from: The Australian
FORTISBank and London-based Virtual Metals, in their latest Asian metals monthly report, have little but good to say about lead.
They think it could be the star performer of the base metals complex for 2009, due to apparent Chinese demand and growing use of the metal in the replacement battery sector and e-bikes (the new electric-assisted bicycles which are very popular in China).
But we now have to hand a Bloomberg report which may upset the lead apple-cart. The agency reports that lead inventories in China, the world’s largest consumer of the metal, may be double the size of stocks held at London Metal Exchange’s warehouses after imports surged and demand from electric bicycle-makers failed to revive demand. In fact, sales of e-bikes have been falling in China, and it is those bikes and their lead-acid batteries that account for much of the metal‘s demand.
As of Tuesday night, LME inventories of lead stood at 114,300 tonnes - that’s a 52-week high. But compare the price: on January 1, the LME stockpile of lead stood at just 45,150 tonnes and the metal was trading at $US999/tonne. Now, with the stockpiles more than double, lead closed last night in London at $US1850/tonne, and then went on to late trading at up to $US1867. Some might see the metal as having been overbought taking into account LME stockpiles and the rumoured extra stocks in China.
Back to the Bloomberg report. It says smelters and traders in China could be storing anything between 200,000 and 300,000 tonnes of lead. Lead imports by China this year have been running at about 2000 per cent more than in 2008.
Meanwhile, London-based ITRI - it used to be known as the International Tin Research Institute - sees some hope for that base metal. Tin has been the laggard on the LME of late, and ITRI acknowledges that the metal is still over-supplied, but argues that the market is looking ahead to stronger demand in the fourth quarter and beyond.
ITRI says the reported delay in the start of tin production at the Pirquitas mine in Argentina means that there are virtually no significant mine start-ups occurring in 2009 and there is not much on the horizon for 2010, either.
The start-up of Silver Standard Resources' Pirquitas silver-tin-zinc mine in Argentina's Jujuy province was put back by unexpectedly harsh winter weather in the second quarter. Tin will account for about 20 per cent of the mine’s revenue. |
