Global lead short-term outlook September 2023

While lead prices are ending September at broadly similar levels to a month ago, and therefore unremarkable compared with the performance of other base metals, exchange stocks swelled on the back of backwardations on both the LME and SHFE. Warranting mainly took place in Asia which is consistent with this region being the weakest market because of China's oversupply. The LME/SHFE arbitrage has been a little narrower since the backwardations eased, but it's still a long way from being closed and therefore refined outflows from China ceasing. Although Chinese refined exports and rising LME stocks are bearish optics, exports have been needed to meet some consumption in the ROW in the face of the ROW's own production shortfalls. Mine supply disruption continues, with Penasquito's continued strike being the greatest, and this should continue to dictate primary smelter output in the short term.