Global lead short-term outlook January 2023

The ending of Xi's zero-Covid policy has been a key macro development of recent months and it will no doubt encumber Chinese lead market activity in Q1. This expectation is supported by a generally unchanged arbitrage after the CNY holidays that signals the persistence of Chinese lead market weakness relative to strength in the rest of the world. This strength is supported by wider macro developments including the IMF's positive assessments, but it mainly reflects reasonably tight markets for both refined metal and concentrates, led by forecast consumption growth of 3%. The Abra project, which is the first major lead-only mine to be commissioned since 2005, produced its first concentrate in January. However, this mine supply growth is unlikely to result in any surplus in 2023. It will merely do to the market what a stock overhang did in 2022, i.e. meet consumption. Surpluses of concentrate and metal are not expected until 2024, and they will not be of notable scale until 2025.