Research

Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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February 2020 | Base Metals


Lead: Larger 2020 surplus after China revisions


Lead prices managed to rebound somewhat last week in line with the stronger tone from other base metals. We expect extremely weak vehicle sales in China in Q1 to hit demand for lead, and we have revised our forecasts lower accordingly. But Chinese smelters are suspending some production too, so we have also lowered our supply outlook. Overall though, the global surplus we forecast for 2020 has expanded by about 50%. Lead prices are already reflecting this softer fundamental backdrop. We would not rule out further price weakness as the virus’s toll on demand becomes clearer.

Chinese lead demand forecasts lowered Spending on large-ticket items is probably the last thing on peoples’ minds in China as they struggle to stay safe and get through the novel coronavirus (2019-nCov) crisis. As a result, we expect exceptionally weak Chinese vehicle sales in Q1 with demand for lead-acid batteries likely to be hit hard. The China Association of Automobile Manufacturers (CAAM) reported retail car sales were down 18% in January, and expects sales may be down 30% in February as would-be buyers stay away from show rooms. By Wednesday last...

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