LONDON, July 6 (Reuters) – An increase in demand for traditional lead-acid automotive batteries and persistent freight problems have created shortages that have been felt most acutely in the huge US auto sector and have drives up lead prices around the world.
While other battery metals, such as lithium and cobalt, have been in demand for electric vehicles, replacement batteries for vehicles powered by internal combustion engines account for half of the global demand in the fuel market. lead of 12 million tons.
The United States accounts for 13% of global lead demand, but consumption has been boosted by the end of COVID-19 lockdowns as motorists seek to replace lead-acid batteries that have failed after long periods of non-use.
Prices were also inflated last week by rumors that a lead refinery declared force majeure, analysts and traders said, although no such news was subsequently released. .
“Rumors have driven prices up, but so far there has been no substance behind it,” said Farid Ahmed, analyst at Wood Mackenzie. “The demand for replacement batteries in the United States has been searing and also strong in Europe.”
The benchmark advance reached its highest level since July 2018 at $ 2,344 per tonne on June 30.
Wood Mackenzie expects lead demand for replacement car batteries to increase 5.9% from 2020 to 6.5 million tonnes this year, to return to pre-pandemic levels, he said. Ahmed said.
This increased demand associated with transportation delays has pushed lead premiums in the United States, which are paid at the top of the LME benchmark prices in the physical market, to a record high of $ 375 per tonne.
Strong demand and the resulting shortages have also triggered inventory drawdowns in warehouses registered with the London Metal Exchange (LME), the world’s largest exchange for visible lead inventory. These stocks are down more than 40% this year to 72,250 tonnes.
In the first four months of the year, the global refined lead market was in excess of 19,000 tonnes, compared to 30,000 tonnes in the same period last year, according to data from the International Zinc and Lead Study Group.
Shortages of concentrates are partly the cause of the shortages. This can be seen in the processing fees paid by miners to turn the concentrate into refined metal, falling to their lowest since September 2019 at $ 50 a tonne this month, according to an Asia Metals assessment.
Reporting by Zandi Shabalala Editing by Pratima Desai and David Goodman
Our standards: Thomson Reuters Trust Principles.