Market Speaks: Lead Seen Extending Gains On Supply Dynamics

Local Lead futures added modest gains today. The counter gained 0.18% to trade at Rs 167 per kg. Following a turbulent first half of the year marked by outbreaks of price volatility, forecasts suggest market sentiment towards lead is set to improve on brighter supply dynamics.

The International Lead and Zinc Study Group (ILZSG) forecasts the usage and supply of both lead and zinc to increase in 2018, with refined lead metal set to rise by 2.7% against refined zincs 2% increase. Despite the lowering of annual TCs, mined production for both lead and zinc is set to increase by 4.2% and 5.1% respectively, according to ILZSG.

Wood Mackenzie forecasts the rate of mined production in the zinc market to offset the ability of global smelters to absorb surplus concentrate, resulting in an eventual levelling out of TCs. That said, the energy research consultancy sees a favorable upward spike in zinc prices for the latter half of 2018, with its three-month price expected to drift beyond $ 4,125 per tonne in 2019.

Foreseeing the lead market taking an alternate path, one that could see prices tick downwards from this years prospected $ 2,460 per tonne figure, Wood Mackenzie maintains a positive view on lead prices remaining supported above $ 2,250 per tonne in the long term.