Lead may fall 415 on slowing global demand
|
|
|
Market moving to surplus for the first time in five years
Lead prices may fall as much as 41 per cent this year as rising supply form China boosts stockpiles and demand growth slows, according to industry forecaster Beijing Antaike Information Development Co.
EXCESS SUPPLY
Lead futures may fall as low as $1,200 a tonne in London from $2,045 on Thursday, Mr. Zhang Changhai, chief lead analyst at Antaike, which advises China’s Government on industry policies, said in an interview. Supply may exceed demand by as much as 117,000 tonnes by the end of the year as the market moves to surplus for the first time in five years, he said.
Prices of the metal, used to make car batteries, touched a record $2,140 on May 8/ Stockpiles monitored by the London Metal Exchange have risen 44 per cent since March13, with the biggest gains in warehouses in the US, the world’s second-largest lead consumer after China.
Lead for delivery in three months on the London Metal Exchange was quoted at $2,070-80 a tonne on Tuesday. The contract has gained over 15 percent since Ivernia Inc’s exports of the metal were halted March 12 from the port of Esperance in Australia on health concerns.
DISRUPTION ‘PRICED –IN’
Toronto-based Ivernia, which accounted for 3 per cent of global supply before the halt, said it would begin talks with an alternative port in Australia this month. “The supply disruptions at Ivernia are fully priced-in” said Mr. Zhang, “Recent surges in prices were more likely to be driven by fund investment in the whole nonferrous metals spectrum than by fundamentals.”
China, the world’s largest lead producer, is adding 500,000 tonnes of production capacity this year, Mr. Zhang said in an e-mailed report. The 14 per cent gain in supply will take output to 3.05 million tonnes, which represents about 600,000 tonnes more than demand, he said.
Net exports of refined lead should rise 11 per cent to 550,000 tonnes even after China cancelled a 13 per cent tax rebate in export last September, he said. Slowing economic growth in the US may reduce consumption of the metal in the world’s biggest economy. The US Government expects the economy to grow at 2.9 per cent this year, down from 3.1 per cent in 2006.
CONCENTRATE SUPPLY
To be sure, consumption of lead in China, the world’s biggest user of the metal, will still grow at 11 per cent this year, Mr. Zhang said. That’s higher than the 10 per cent forecast by Mr. Neil Hawkes, an analyst at London-based metals consultant CRU, earlier this month. Supply of lead concentrate, which is melted to produce the metal, in Europe is also in “shortage”, Boliden AB, Europe’s second – largest zinc producer, said May 4.
China’s plans to limit the construction of smaller smelters may also support lead prices at about $1,400 a tonne from next year, Mr. Zhang said. A new lead production line must have annual capacity of more than 50,000 tonnes and new lead mines must have minimum capacity of 30,000 tonnes of ore a year over at least 15 years, the National Development and Reform Commission, China’s economic planning agency, said March 16.
Zhang expects lead for immediate delivery to average $1,230 a tonne this year from $1,286 last year.
|
|
|
|
Source : Business Line |
|
|
|
RecycleINme.com. All Rights Reserved
