Global lead short-term outlook February 2020

The repercussions of the coronavirus outbreak dominated in February as the lead market pondered over the short- and long-term effects. A largely technical squeeze on lead's cash price pushed the existing backwardation up to a nine-year high as liquidity for nearby dates evaporated. Demand sectors were feeling the effects of China's immobilisation as global automotive supply chain disruption impacted OE battery demand. These was also much to consider in concentrate markets. The extended Chinese New Year holiday period saw the seasonal recovery in concentrate supply and demand absent this year, with logistical bottlenecks trapping material in port. Upward pressure on TCs has increased due to reduced profitability of lead-zinc mines from falling zinc prices.