Cash lead on the LME has gained almost 21 per cent in the last one month, settling at 3,338 US dollars/tonne on February 28. The three month-cash spread first appeared to sink more decisively into backwardation, reaching 29 US dollars/ tonne, before showing signs of increasing later in the month. Lead was primarily pushed higher due to the overall bullish mood on the base metals complex and concerns about Chinese supply of refined lead after last month's stormy weather. The Zhuzhou smelter in China which is the country's largest smelter for zinc and lead had stopped operations due to the severe snowstorms and till date has not been able to resume operations at 100 per cent capacity. Reacting to short-term tightness, lead premiums in the Chinese market have increased 10 US dollars/tonne to 30-40 US dollars/tonne. The LME inventories of lead also did not help matters much as there was a continuous increase in the cancelled ratio of lead in the first threes weeks of the month. This increase was a reflection of lower supplies coming in than increased demand. Given that demand for car batteries remains sluggish, the 6.4 per cent decrease in LME inventories since the end of January could be a result of lower smelter production in China. However, Zhuzhou smelter group has reportedly restarted production now that calmer weather has arrived.
展开▼
