Lead’s balancing act still depends on China’s exports

Lead’s balancing act still depends on China’s exports

The global refined lead market will be roughly balanced between supply and demand this year, according to the International Lead and Zinc Study Group (ILZSG).

Production fell short of usage by a substantial 141,000 tonnes last year but the deficit will shrink to just 20,000 tonnes this year, according to the Group’s April update.

ILZSG has reduced the expected supply shortfall from 42,000 tonnes at the time of its last assessment in October.

The revised deficit is marginal in the context of a 12-million-tonne global market.

However, global balance doesn’t mean regional balance.

The physical market in both Europe and the United States remains tight and visible stocks are still low.

Western lead buyers remain reliant on China’s exports to smooth out the global supply chain.

China’s Exports Still Booming

China exported 116,500 tonnes of refined lead last year, the highest annual total since 2007.

The country had been a net importer in the 2017-2020 period but flipped to net exporter in 2021 as a string of smelter production hits opened up gaps in the Western supply chain.

Exports remained robust in the first quarter of 2023, China shipping 46,000 tonnes of metal to the rest of the world, up 22% on the first three months of 2022.

Imports have been minimal over the last year or so as the arbitrage remains locked in export-friendly mode. Inbound shipments amounted to just 426 tonnes in January-March, of which 275 tonnes came from Malawi.

China’s export flows are travelling far and wide.

First-quarter shipments included 3,062 tonnes to the United States, 3,324 tonnes to Italy and 3,050 tonnes to the Netherlands.

Top export destination was Taiwan with shipments of 11,000 tonnes. Some of this metal seems to have made its way into London Metal Exchange (LME) warehouses.

Registered Chinese-brand lead stocks rose from zero at the start of the year to 6,750 tonnes at the end of April, according to the exchange’s latest monthly update.

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