Fitch Solutions raises lead price forecast

8th February 2021 By: Donna Slater - Features Deputy Editor and Chief Photographer

Amid improving market fundamentals, financial risk management, solutions and insights company Fitch Solutions Country Risk and Industry Research (Fitch Solutions) has revised its 2021 lead price forecast upwards to an average of $1 950/t from its previous forecast of $1 900/t.

The firm notes that this marks a modest improvement from 2020, during which lead prices averaged $1 837/t, surpassing slightly Fitch Solutions’ forecast of $1 800/t.

However, early into 2021, lead prices trended upwards as a result of tighter Chinese refined lead supply and increased demand ahead of the country’s Lunar New Year festivities. China’s rapid V-shaped recovery from Covid-19 has led the broad increase in lead prices since Spring of 2020.

While Fitch Solutions expects Chinese lead demand to increase slightly this year, experiencing 1% year-on-year growth after an estimated 7.5% contraction in 2020, the firm expects the majority of global lead consumption growth to be derived from countries other than China.

Also, Fitch Solutions notes that coinciding with the broad price recovery has been a recovery in the operating rates of the largest Chinese lead-acid battery producers. However, the firm also notes that these producers are performing below 90% capacity as of year-end 2020, which could add some upside to domestic consumption in the coming year.

As such, Fitch Solutions expects prices to average higher this year as global automotive manufacturing experiences a significant rebound, with the firm’s automotive team forecasting global vehicle production to grow by 5% this year, following a steep 19.3% contraction in 2020.

Lead is primarily used to manufacture lead-acid batteries, although a small percentage is used in the production of pigments, alloys and cable sheathing. Among battery usage, lead is most commonly used in conventional-fuel vehicle batteries, with use also in electric vehicles (EV) and solar panel energy storage batteries.

Further, recoveries in vehicle production in key lead consumption markets such as India, South Korea and the US will bolster demand for the metal to be used in automotive lead-acid batteries.

Together, the top five lead consumers excluding China make up about 29.8% of global demand, helping to narrow the production surplus. We forecast the refined lead production balance to narrow to 534-million tonnes this year, down from 673-million tonnes in 2020.

At the same time, refined lead production will increase, likely supported by a rise in recycled battery material following a rigid winter season.


In a strong market, Fitch Solutions currently holds a more bullish, longer-term outlook on lead prices and has revised its forecasts through to 2024 upwards to reflect a narrowing production surplus.

The firm expects refined lead demand to gradually increase in the longer term, with the production surplus shifting to a deficit in 2029 as supply is needed to manufacture EVs.

As such, Fitch Solutions forecasts lead prices to reach $2 100/t by 2024, compared with a previous forecast of $1 850/t.

Despite sustainability becoming top of mind in the coming decade and steering government policy towards climate conscientiousness, Fitch Solutions do not foresee lead being fully eliminated from automotive vehicles. This is because most EVs presently use 12 V lead-acid batteries for starting, lighting and ignition functions, as well as in-car entertainment.

In addition, increasing lithium supply challenges will likely cause auto manufacturers outside of Tesla to maintain the 12 V lead-acid battery in their EV models for the time being.

In terms of risk to Fitch Solutions’ outlook, the firm notes that an increase in lithium mining developments or technological improvements in lithium-ion battery recycling present downside risks to its lead price outlook.

As such, should lithium supply prove sufficient to meet anticipated demand from EV manufacturing, then Fitch Solutions expects lead prices to experience downwards pressures, as automotive manufacturers may seek to replace 12 V lead-acid batteries with a lithium-based alternative.

Likewise, should battery recycling technology advancements enable lithium-ion batteries to be recycled at a more efficient cost, then Fitch Solutions also expects to see a favouring of the 12 V lithium-ion battery over lead-acid in the long term.