Buoyed by an ongoing rally in industrial metal prices, lead prices will likely remain resilient until mid-2021, research agency Fitch Solutions Country Risk and Industry Research says.
It is, therefore, revising its forecast lead price higher to $2 050/t, from its previous estimate of $1 950/t.
Fitch Solutions expects the rally in prices to lose steam around midyear and temporarily weaken over the second half of the year as supply improves.
Secondary lead production (recycling) will be boosted by an increase in car battery recycling, it points out.
Fitch Solutions has, however, also revised its longer-term price forecast for lead, owing to its expectation that the global market will again tighten over the coming years.
It now forecasts an average lead price of $2 113/t over 2022 to 2025, compared with its previous forecast of $2 000/t.
The agency expects refined lead demand growth to outstrip production gains, which will gradually erode the yearly production surplus that it expects for this year.
Fitch Solutions says the global market is likely to slip into a marginal production deficit of 8 000 t in 2027, widening to 439 000 t by 2030.
The use of refined lead in the global automotive industry will continue to grow, despite tightening environmental regulations and increasing use of lithium batteries in electric vehicles, it says.
Moreover, limited availability of lithium will force many battery markers to continue relying on lead batteries over the coming decade, it notes.
While battery manufacturers continue to target lower lithium-ion battery costs, a possible lithium deficit in the latter half of the decade will push up lithium prices, likely increasing the demand for refined lead out of necessity and cost efficiency.
With the present lithium mining project pipeline, Fitch Solutions does not anticipate enough supply to match lithium-ion battery demand.
In terms of risks to its price outlook, Fitch notes that a significant improvement in lithium supply prospectus could create downside pressure on lead prices.