December 3, 2021: Metals across the Shanghai Futures and London Metal Exchanges fell across the board last week — apart from lead, the Shanghai Metals Market reported on November 29.

The SMM blamed the Covid-19 outbreak in Africa for the slump in other metal prices, while although primary lead smelters had resumed production, secondary lead output had declined because of equipment maintenance and solid waste inspections.

“The overall supply remains tight, but is expected to ease amid production recovery of smelters,” the SMM said.

“Lead-acid battery consumption recovered gradually in southeast Asia amid an alleviated Covid-19 pandemic.”

The SMM predicts that growing supply will mean the upward trend is likely to be limited.

Wood Mackenzie principal analyst, lead markets, Farid Ahmed said that where China was concerned, as well as undergoing inspections, primary smelter production had also been curtailed from power rationing for mining and smelting.

“Many secondary plants took the opportunity during this quieter period to undertake maintenance work, further reducing availability, added to which many were also subject to environmental checks,” Ahmed said.

“That situation was compounded by significant volumes of lead leaving the country. The latest trade statistics show that 26,600 tonnes of refined lead was exported from China in October, with expectations of a similar quantity leaving during November.

“This is why SHFE lead stocks started to be drawn down — and rapidly — last month. The November total was down a quarter on the tonnage sitting in warehouses at the end of October, and down a third from the record volume of SHFE lead stocks in mid-September.

“Beijing hosts the Winter Olympics and Paralympics in February and March next year. This will undoubtedly be preceded by mandated industrial shutdowns in the preceding weeks in an attempt to ensure clear, smog-free skies for the Chinese authorities to show the world’s media.

“The aggregation of all these issues raised concerns for lead buyers who don’t want to get caught short, so the price responded in a wholly predictable way — it went up.

“ Whether it will continue along this upward path for long is unlikely as supply responds. But much still depends in the winter weather during China’s ‘battery kill’ season.”

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