Lead on steady rise with increased lead battery demand
2015/05/15Lead prices remains relatively at high level.
The benchmark LME lead price hit a high of $2,098/t since last October on April 27. Supported by the weak yen, the Japanese domestic quotation of lead recorded seven-year high of 310yen/t since June 2008.
Global demand for lead battery is increasing with no letup, while the lead markets have seen a steady rise as supply from newly developed lead-zinc mines is overwhelmingly less.
Also, the LME lead inventory which has contributed to the prices up dropped by 83,950t to 183,975t on April 24 from 267,925t late November.
Especially, it dropped rapidly in April with nearly 40,000t decreasing after April 9. In addition to the purchases from some sources with actual demand and an investment management company, the cancelled warrant* has risen to 87,925t accounting for the half of the total inventory, which contributes to the price rise in lead markets. (*Cancelled warrant is the inventory whose warrant i.e. warehouse certificate has been issued to deliver out of the LME warehouses. As it represents the amount which will decrease in future, the increased cancelled warrant has a positive effect on the market price.)
Only primary aluminum has high cancelled warrant in LME metals other than lead. In what some see as, actual demand would be strong when we see the LME inventory decreasing and the cancelled warrant increasing. However, the situation of aluminum must be different with that of lead in view of the deliberate manipulation in inventory continued by LME warehouse firms from 2009 to last year.
Lead is the Base Metal with Real Power
In light of basal conditions of traditional price rise that supply of primary materials such as ore and ingot is not sufficient, keeping rather tight and demand is also increasing in a factual manner, we can say that the lead is the real metal with power among the base metals.
In fact, demand for lead is steady in battery. The premium of secondary lead, which has become mainstream in lead battery materials for global automobile industry, remains at high level keeping around $300/t in the U.S.
The global demand for refined lead is 11 million tons. About 9 million tons of them are used for the batteries in automobile, motorcycle, construction machinery and industrial equipment. More than 80 million automobiles are produced every year in the world and most of them are equipped with lead battery. It is said that about 400 million units of lead battery for automobile are produced in total to be installed in brand-new cars and to be replaced in existing cars.
Few items would keep as classic but large-scale markets as lead battery while the great number of technological innovations has changed the world between the 20th century and the 21st century.
In the huge automobile market, the role of lead battery is increasing further when the automobiles offer technical advantages and increase use of electronics (Idling stop vehicle increasing in Japan use more lead due to high load to battery). The fact firmly establishes a place of lead, the traditional and classic metal.