Lead prices, both home and abroad have refreshed high in recent days. What factors drive lead prices up?

SHANGHAI, Nov. 28 - Lead prices, both home and abroad have refreshed high in recent days. LME lead grew $192 per tonne last Friday. Shanghai Metals Market (SMM) Reports #1 lead price increased 1,200 yuan per tonne to 21,050-21,200 yuan per tonne on Monday, hitting the highest level since April 28, 2008.

What factors drive lead prices up?

“Positive fundamental is one of the major price drivers behind surging lead prices, in addition to speculative funds and bullish sentiment,” SMM lead analyst says.

Chinese Battery Producers Plan to Cut Output as Lead Surges, SMM Says. According to SMM survey, domestic Lead battery producers began raising battery prices due to rising costs on November 15 when spot lead climbed above 18,000 yuan per tonne in China's market and some producers even stopped receiving new orders. Currently, most mid and large-scale battery producers are discussing cut plans.

First, both supply of domestic and imported lead ore is tight which can also be told from falling TCs of lead concentrate, SMM survey finds. Offers of TCs for domestic lead concentrate dropped below 1,000 yuan per tonne and those of imported lead concentrate fell to $30-40 per dry tonne, the record low level.

Second, lead supply is insufficient in China's market.

Primary lead smelters produce only for term contracts with shortage of goods and output at secondary lead smelters decline significantly due to new environmental protection inspections. To sum up, supply is extremely insufficient in China's market especially goods with bills.

Third, downstream demand is picking up.

The surge in lead price has pushed up battery prices and orders as well. Growing orders also help utilization rates at battery prices at high. Strong buying interest has also reduced battery inventories down from a high level seen in H1 2016 also pushing up lead prices.

EverExceed Corporation

Dec. 1st 2016