Lead’s rally from multi-year lows hit November 2015 were on the back of major zinc-lead mine shutdowns and strong demand from the automotive sector, responsible for the bulk of demand.A new report from BMI Research says positives for the market will largely stay in place leading to a widening albeit relatively small market deficit through 2021.
BMI, a unit of rating agency Fitch, forecasts the lead market will be minimally undersupplied this year the back of persistent supply cuts and growing demand from second-tier consumer countries but the shortfall could quadruple to 70,000 tonnes in 2021.
China produces nearly half the world’s mined lead and is responsible for some 40% of global refined lead output. The country’s production of refined lead will stagnate on the back of Beijing’s pollution clampdown on heavy industry and growth will be muted at best elsewhere. China’s imports of lead was up threefold last year and will slow going forward, but an increasing refined deficit will support import levels.
On the demand side Chinese lead consumption growth of 11% in 2016 will slow dramatically as its red hot auto market cools, but India will take up some of the slack with growth rates in high single digits for the next five years.
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