The rapid retreat in lead prices after such a strong showing in December is sending mixed messages. Generally we expect lead's fundamentals to be tightening, but concerns about possible contagion from weak equities in China to the auto market may have hit sentiment. The market, however, seems to be ignoring the strength in auto sales in USA and Europe. This may be because these are mature markets, which are usually not where the growth is, but we think that robust vehicle sales suggest considerable pent-up demand from first time buyers, so we would imagine that the European and US vehicle populations are growing again, which is bullish for lead.
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