Analyst firm Fitch Solutions Country Risk & Industry Research expects lead prices to edge lower at $2 150/t over the second half of this year, as demand from the global automotive market weakens – in line with slower economic growth.
Notably, Fitch Solutions says Russian exports of lead – amid its invasion of Ukraine and resultant sanctions against many of its commodities – will not significantly impact the global market, as it is only a mid-sized supplier of lead.
The firm’s lead price forecast for 2023 remains unchanged at between $2 100/t and $2 150/t.
Refined lead prices averaged $2 302/t for January through to May.
Explaining the rationale behind lowering its 2022 price forecast, Fitch Solutions says a combination of soaring energy prices and rising interest rates have been undermining global economic growth.
Fitch Solutions also cut its real gross domestic product growth forecast for the world economy from 3.3% in April to 3.1% in May.
The firm forecasts global lead consumption to contract by 3% this year and believes the Ukrainian war will have no significant upward impact on lead prices.
Russia accounted for 8.7% of mined lead exports and only 2.8% of refined lead exports.
On the other hand, as global supply chain disruptions improve, Fitch Solutions predicts there will be more availability of refined lead in the market, as China has been increasing lead exports in 2021.
China exported 95 000 t of refined lead in 2021, which was the largest amount since 2007 and exported 38 000 t of lead in the first quarter of this year alone.
Going forward, Fitch Solutions expects refined lead prices to trend gradually higher as the market tightens, deeming it likely that refined lead demand growth will outstrip production gains.
“We forecast the global market to slip into a production deficit of 18 000 t by 2028, widening to 320 000 t by 2031. The use of refined lead in the global auto industry will continue to grow, despite increasing use of lithium batteries in electric vehicles.
“Limited availability of lithium will force many battery manufacturers to continue relying on lead batteries over the coming decade. A lithium scarcity will also likely increase demand for refined lead out of necessity and cost efficiency,” the firm explains.