April 23, 2020: Market analysts believe the price of lead will be prevented from falling as low as other base metals because of demand from battery makers. S&P Global said on April 15 it had revised its earlier estimates to show a further drop, but still believed the fall would not be more than 10%, unlike a predicted 22% drop for copper. Wood Mackenzie, the research consultancy, also predicts stability.

“A lot of this has to do with the demand for lead remaining pretty stable — even after the effects of Covid-19 are included,” said Farid Ahmed, principal analyst, lead markets with Wood Mackenzie.

“The use of lead has suffered decades of substitution, so what’s left is mostly irreplaceable in terms of function, practicality or price. Also, around one half of all lead is used for automotive replacement batteries.

“This type of demand is much more insulated from the variabilities of macroeconomics and geopolitics. And tends to plod on much less buffeted by the winds of economic downturns or demand spikes.”

However although not expecting a collapse, S&P has revised its metals price forecasts since early March to reflect a more considerable impact from Covid-19 than had been anticipated, with lead falling by around 10% but not as far as copper, which could drop by up to 22%.

“We also now expect the rebound to be less robust, after S&P Global Ratings significantly reduced its 2020 global GDP growth forecast to just 0.4 %,” said the firm.

“Furthermore, our price forecasts have been significantly reduced as S&P Global Ratings does not expect as significant a Chinese stimulus plan as that launched during the 2008-2009 financial crisis. As a result, increased demand in the second half of 2020 will depend more on the pace with which national economies ease back toward normalcy.”

S&P said the lead price was traditionally less volatile than other base metals and as such was not surprised that it fell by just 10% over the first quarter of 2020, as opposed to the other base metals, led by copper.

With many lead battery makers continuing production, albeit at a lower rate, lead demand appears to have remained fairly steady.

“The price is generally more stable because most lead production goes into lead-acid batteries for engines, which need to be replaced approximately every three years,” says S&P. “Despite the pandemic, car and truck batteries still need to be replaced, so the hard base of battery replacement is shoring up lead demand.”

Lithium battery material prices are predicted to fall less far, with cobalt and lithium carbonate falling by 5% and 8%, according to S&P Global.

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