Lead is expected to shine brightly in the coming months, outperforming other metals as cold weather forces consumers to replace auto batteries and supplies tighten, analysts predict.
The resilient metal has already been the best performer on the London Metal Exchange (LME) and is expected to continue its winning streak.
Analysts at consultancy Wood Mackenzie pointed out that the lead market is supported by low levels of stocks, concentrate, and metal, making it an attractive investment option.
Unlike other base metals, lead is primarily used in vehicle batteries, with 78% of demand coming from replacements. As winter approaches in the northern hemisphere, extreme temperatures lead to peak season for flat batteries, further boosting demand.
Supply of refined lead has also been constrained, with closures of smelters such as Nyrstar’s Port Pirie facility in Australia and Glencore’s operations in Italy. Tom Price, head of commodities strategy at Liberum, warned of a potential supply crunch as these closures take effect.
In response to the tight market conditions, premiums for physical metal have surged in Europe and the United States. Low inventories on the LME and Shanghai Futures Exchange, coupled with a shortage of raw materials like lead residues from closed zinc smelters, have further supported prices.
Wood Mackenzie’s Giles Lloyd expects treatment charges for miners to remain low as refiners cope with reduced supplies.
Lead is set to shine brightly in the months ahead, offering investors an attractive opportunity in an otherwise volatile market.
