Global supply of refined lead metal exceeded demand – ILZSG

Refined LeadThe International Lead and Zinc Study Group released preliminary data for world lead supply and demand during 2012. The data compiled by the ILZSG indicate that in 2012 global supply of refined lead metal exceeded demand by 64 kilo tonne. Over the same period inventories reported by theLondon Metal Exchange Shanghai Future Exchange and producers and consumers increased by 23 kilo tonne totalling 628 kilo tonne the year end.

Global lead mine production increased by 11.5% compared to 2011. Output was higher in a number of countries including Mexico, Peru, the Russian Federation and Turkey, however the increase was principally due to a reported 20.4% rise in China.Other key results are:

Rises in output of refined lead metal in the India, the Republic of Korea, the United Kingdom and the United States were largely balanced by reductions in Australia, Kazakhstan, Morocco, New Zealand and Spain resulting in a limited global increase of 0.2%. Output in China was at the same level as in 2011.

Despite a further decline in European demand for refined lead metal of 2.4%, world usage increased by 1.3%. This was primarily a consequence of higher demand in India, Japan, Mexico and the United States. Apparent demand in China was unchanged from 2011. China’s imports of lead contained in lead concentrates rose by 26.3% to reach a record of just over a million tonnes.

Cash Settlement and Forward Three Month Prices on the LME averaged USD 2061 and USD 2073 respectively during 2012, 14% and 13.3% lower than during 2011. The highest Cash Settlement Price of USD 2340 was recorded on 31 December and the lowest of USD 1744 on 27 June.

Source: ILZSG

Lead Production and Market Forces

As with all metals, there are two production methods. Primary production from mined Lead ore is of course the original source of all Lead, but secondary production, where it is recovered from recycled products or from residues arising from the production process, is of enormous importance.

About 40% of Lead production produced worldwide is derived from ore. The proportion of Lead produced from secondary sources (i.e. scrap metal), which represents about 60% of total worldwide production is higher in the more industrialized countries. North America produces 70% of its Lead from secondary sources and Western Europe 60%. In contrast Chinese production is almost entirely from ore. The impressive recycling figures are made possible by the fact that today most Lead is used in readily recyclable applications.

It is Lead acid batteries that are mostly recycled. Lead in these can be re-melted any number of times and its impurities can be easily removed. The final product (termed Secondary Lead) is indistinguishable from Primary Lead that is produced from the ore.

According to International Lead and Zinc Study Group (ILZSG) Lead from secondary material totalled nearly 55% in 2011.

Other data by ILZSG underline that:

  • Global Lead mine production increased by 9.8% compared to 2010. This was mainly due to a significant 27.4% increase in Chinese output that more than balanced reductions in Australia, Peru and the United States. Overall China accounted for 51% of world Lead mine production in 2011.
  • A rise in world refined Lead metal output of 7.1% was primarily a consequence of higher production in China, Germany, India, the Republic of Korea and the United States.
  • The proportion of Lead produced from secondary (recycled) material totalled 54.5% compared to 56% in 2010.
  • World usage of refined Lead metal benefited from further growth of 9.9% in Chinese apparent demand and a rise of 9.6% in the United States where usage reached its highest level since 2006. Demand in Europe was 0.7% lower than in 2010.
  • Chinese imports of Lead contained in Lead concentrates fell by 10.3% to 794kt. This was the first reduction in nine years.
  • Cash Settlement and Forward Three Month Prices on the LME averaged US$2402 and US$2394 respectively during 2011, 11.8% and 10.2% higher than during 2010. The highest Cash Settlement Price of US$2939 was recorded on 11 April and the lowest of US$1792 on 20 October

Lead uses in USThe supply of primary Lead is inelastic because it comes primarily from polymetallic operations where most of the revenue is generated from other metals, particularly Zinc and Silver. However, the Lead to Zinc ratio in deposits that are being mined is decreasing from 0.7:1 in 1960 to close to 0.2:1.

Estimates by Lead industry suggest that between 70,000 and 90,000 people are employed in Lead mining, smelting and refining, and over 2,000 more in Lead oxide manufacture. Battery manufacture is estimated to employ about 60,000-70,000 people. Many more work in industries that use small amounts of Lead in their products.

Prices of Lead are determined at the London Metal Exchange (LME). It was first traded in the LME in 1903. The LME Lead futures contract calls for the delivery of 25 tons of at least 99.97% purity Lead Ignots. The contract is priced in US dollars per tonne. Some of the factors influencing the prices, and demand and supply of the metal include changes in the inventory at the LME warehouses, the economic growth rate of major consuming countries, and global growth and demand in major consuming industries.

According to ILZSG, over the years, demand for Lead has always surpassed supply, and hence prices of the metal have been increasing steadily post-2005, the demand-supply situation became worse, with the former far outstripping the latter due to decrease in production and the LME stocks going down (because of a boom in the automobile and the telecom sectors of the developing countries); this lead to a drastic increase in the Lead prices, resulting in supply not really keeping pace with the demand.

World Lead Production in 2011

World Lead Production 2011

Source: lizsg.org