Fitch has raised its forecast for lead prices which will likely remain robust until mid-2021 on the back of the ongoing rally in industrial price metals, reported global media.
Lead prices are projected to rise to $2,050/mt says Fitch while their previous estimates were around $1,950/mt. Prices are expected to be bearish in the second half of 2021 as supply is set to increase.
Mine supply will outpace demand as they rise by 5.1pc to 4.75mn mt in 2021, according to the International Lead Zinc Study Group (ILZSG). Refined lead production in South Korea, China and Belgium will boost output to 12.07mn mt, up 3.3pc in 2021 from the prior year. Excess supply will pressure lead prices post mid-2021. A lead surplus of 96,000mt is expected at the end of 2021, according to ILZSG.
In the long run, however, Fitch believes that global market supply will tighten again in the coming years and projects lead prices at an average of $2,113/mt in 2022 to 2025 compared to its previous forecast for the period at $2,000/mt.
Fitch ascertains that secondary lead production will jump on the back of increased car battery recycling. In a report last year Davis Index had discussed that rate of battery replacements increase during or post a lockdown which turned out to be true. In India, the ongoing lockdown, which restricts the movement of people and vehicles, will likely lead to dead batteries and boost supply at recycling yards.
Demand from the global automotive sector is expected to sustain and with it, the consumption of refined lead could increase despite environmental concerns and increased adoption of lithium batteries. Fitch notes that lithium availability is limited which will push battery makers to rely on lead batteries for decades. On the contrary, significant improvement in lithium supply could disrupt the lead market and pressure lead prices.