SHANGHAI, Dec 29 (SMM) - Lead market supply and demand pattern 2022-2023E
According to SMM research, the new secondary lead production capacity in China will be about 1.08 million mt in 2022.
In 2023, China’s new secondary lead capacity will reach 2 million mt. Most of the new secondary lead projects will be put into production in the middle or second half of 2023.
The production of secondary lead will show an upward trend in 2023
According to SMM research, in the past two years, the profits of secondary lead smelters have shifted to incomes from by-products such as plastics, lead ash, and sulphuric acid. If they rely solely on revenues from lead smelting, they are mostly in a state of loss. Lead-acid battery scrap supply failed to keep up with demand from massive expansions of secondary lead smelters, causing secondary lead production to decline slightly YoY in 2022. However, considering the expansions of new secondary lead capacity and increase in lead-acid battery scrap supply thanks to demand recovery, SMM expects that the output of secondary lead will pick up in 2023.
Lead concentrate to maintain tight balance
SMM predicts that the TCs of domestic lead concentrates will hover at lows amid tight balance in 2023.
Lead price outlook in 2023
SMM predicts that China's lead market will see a slight supply deficit in 2023. If the export performance is strong in 2023, domestic stocks will be transferred to overseas. From the perspective of overseas markets, due to factors such as the pandemic and the energy crisis, many overseas lead smelters reduced production or shut in 2022. According to SMM research, roughly 300,000 mt of lead capacity was closed overseas this year, and 260,000 mt was under maintenance. It is estimated that some of the overseas lead capacity will be resumed next year. As it will take some time for overseas lead production to recover, SMM believes that overseas lead inventory will remain low.
In terms of overseas consumption, due to factors such as the pandemic, supply chain crisis, and energy issue, SMM expects that European lead consumption will weaken.
As for the balance of supply and demand in the global lead market, SMM predicts that the supply shortage in the global lead market in 2023 will narrow compared to 2022.
Lead prices are expected to be weak in H1 2023 due to massive pandemic outbreak and off-season for lead-acid battery consumption, but may rise significantly in H2 with arrival of the peak season.
