Among Base Metals, Lead Is The Hope

After a poor start to the year, caused in large part by the mild northern hemisphere winter, activity in the lead market has gradually improved, spurred on by rapidly expanding demand in developing countries, where car fleets are ageing and demand for e-bikes is growing fast.

In case of zinc, despite a rapid increase in mined output of zinc ore, production of the metal has fallen, and demand too has been decidedly weak.

After five years of surpluses, substantial quantities of zinc have accumulated in stockpiles around the world, with close to one million tonnes of metal now held in LME warehouses.

This is beginning to create problems of access to this metal, as zinc queues at some warehouses lengthen.
The zinc market is therefore in danger of following the aluminium market, with rising premiums for delivery of metal expected to reflect the delays in withdrawing metal from LME warehouses.

When it comes to nickel the anticipated shock of the Indonesian ban on exports of unprocessed raw materials has been more than neutralized by additional supplies of nickel ore from the Philippines, leaving Chinese importers nursing large stockpiles of low-grade ore.

Alongside higher nickel output from a range of new mines around the world, falling energy costs helped contribute to an unexpectedly sharp fall in nickel prices.

Looking ahead to 2013, nickel prices are expected to be constrained by high stocks of both ore and finished metal, averaging just $18,750/tonne.

In the Chinese zinc market, a sharp rise in mined output appears to have had as much to do with demand for co-products such as lead, but the collapse in Chinese imports of zinc ore may have diverted some of the resultant zinc ore stock accumulation overseas.

As a result of this heavy stock accumulation, Chinese users of metal are unlikely to be squeezed into paying markedly higher prices over the coming year. Via

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