Lead prices to hit 10 year high of $2,900/t

Lead prices could reach a 10-year high of $2,900 this year, Edward Meir, a commodity consultant for INTL FCStone, told BESB on February 28.

The reason for this spike is last year’s shortfall of lead inventory has been followed by a further deficit for this year. “Inventories will be falling,” he said. “This is because lead is mined as a by-product of zinc, and as there has been a chronic under-investment in zinc mining, production of lead is down.”

The International Lead and Zinc Study Group reported the lead deficit shortfall for the first 10 months of last year was 273,000 tonnes — compared with a surplus in the same period the year before.

Meir predicts an annual average throughout the year of $2,470 a tonne.

“Some contracts have lead price escalators which makes the pass through less difficult, but other contracts do not and prices will rise when contracts are renewed,” Geoffrey May, principal at Focus Consulting, told BESB.

“Some battery manufacturers will have a part of their lead supply hedged at lower prices. But, in the longer term, higher lead prices will result in higher battery prices as lead is such a large part of the cost of the battery.”

Because lead is widely recycled — according to the International Lead Association, 80% of lead produced in the US is secondary lead, and in Europe it is above 60% — prices had been saved from really taking off, Meir said.