Lead prices that had cooled off over the past year have started slowly inching up again.

Until early 2018, international lead prices on the London Metal Exchange had showed an increasing trend, moving from a multi-year low of $1,600 per tonne in early 2016, to $2,500 a tonne by October 2017, and to $27,00 a tonne in early 2018.

However, prices declined after that, touching a low of $1,885 a tonne in end-November 2018. Prices are slowly heating up again and are now hovering at $2,000-2,100 a tonne.

In India, MCX spot prices have mirrored international trends in the above periods. Domestic lead prices stand at about ₹150 a kg now, moving up from the low of ₹135 a kg from end-November last year.

What’s driving prices?

A major reason for the decline in prices for most of 2018 was the slowdown in economic growth in China.

China is the biggest consumer of lead, accounting for about 40 per cent of the global usage. China’s focus on infrastructure projects had pushed up the demand for industrial metals including lead in 2016 and 2017.

Besides, the growing popularity of e-bikes and e-trikes in China that use lead-acid batteries also triggered huge demand for lead in that geography.

However, the trade dispute with the US, a drive to cut the country’s high debt and weak domestic demand slowed economic growth in China last year.

For the full year 2018, the economy expanded 6.6 per cent, the slowest since 1990.

But despite the Chinese slowdown, higher-than-expected supply shortage is probably moving up lead prices now.

Latest available data from the International Lead and Zinc Study Group (ILZSG) indicate that global demand for refined lead metal exceeded supply by 95,000 tonnes during the first 11 months of 2018

Besides, ILZSG further estimates that demand for refined lead metal will exceed supply by 1.23 lakh tonnes in 2018.

This represents a change to the previous prediction — in April 2018 — of only a 17,000-tonne deficit in the global lead market .

Initially, lead-mine production was predicted to rise 4.2 per cent in 2018 (over 2017) to 4.90 million tonnes. But mine production until November 2018 has come in only at 4.195 million tonnes, a fall of 2 per cent over the same period in 2017.

This was mainly due to lower output in China, Kazakhstan, Peru, South Africa, Sweden and the US. Consequently, growth in refined lead metal output, too, dropped.

World refined lead metal output was expected to rise 3.8 per cent to 11.88 million tonnes in 2018 (over 2017). But until November, the output stood at 10.67 million tonnes, less than 1 per cent higher than 2017.


Going by the outlook for the full year 2019 put out by ILZSG in October 2018, supply of refined lead metal is expected to be adequate. Global demand for refined lead metal is forecast at 11.79 million tonnes in 2019. Although usage in Europe and the US is expected to move up 1.8-2.5 per cent, a 1.3 per cent fall in usage in China is anticipated in 2019. As against this, world refined lead metal production is expected at 11.84 million tonnes in 2019.

According to ILZSG, production in 2019 will benefit from higher output in Europe and the US where output is forecast to grow 3.9 per cent and 2.4 per cent, respectively. Refined lead supply in Australia, China, India and South Korea is also expected to increase.

However, the tight supply conditions that have come to light since the release of this forecast could continue to push up prices. Besides, though a fall in usage is expected in China, further stimulus measures to give a leg-up to economic growth could heat up demand for lead from China, too.