Barclays maintains their full year LME lead price forecast at $2,239 a ton while the metal's first-quarter prices were slightly softer than expected averaging $2,105 a ton, compared with their forecast of $2,200 a ton.According to Barclays, the fundamental picture for lead continues to look constructive with the market in a modest deficit and reported stocks-to consumption very low.
Data from the ICSG show that the US lead market deficit continues to increase, though we believe that may be partially exaggerated by record-high imports in January.
Barclays understands that some of those imports went to unreported stock builds, with market participants keen to hold a more comfortable inventory buffer given the lack of domestic production following the closure of the Herculaneum smelter.
Globally, demand is being supported by the build out of 4G networks, especially in China, India and, to a lesser extent, Africa. Stationary battery demand for this use is expected to be a significant contributor to global lead demand alongside solid transportation demand, especially in China and from a recovering European autos market.
The restructuring of Exide Technologies could further tighten the US market depending on what it decides to do with its smelter assets. Regardless, the risk is for significant disruption since a sale would require new owners to make the facilities environmentally compliant. Alternatively, if Exide kept its US smelters, it could use this to feed at least part of it battery operations. However, smelter upgrades would still be required, leading to closures and likely production disruptions, which could tighten US supply further.
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