Global lead short-term outlook March 2019

Lead performed poorly in March, the worst performer among base metals and shedding over 6% of value. The price slide seemed unable to halt its relentless decline, despite total LME stocks remaining at historical lows. Markets focus seemed fixed on the vanishing cancelled warrants – down to a nine-year low – and instead seemed justified in their belief that refined lead supply tightness had disappeared together with the cancellations. Spot TCs for low-silver concentrates have increased to $35/t alongside a further rise in TCs for high-silver concentrate, which offsets some of the value lost by smelters in January from the narrowing arbitrage. Imported concentrates are still less attractive than domestic to Chinese smelters but the underlying market is still relatively tight and remains particularly vulnerable to supply disruptions. Major annual contract negotiations have therefore advanced little.