MethodologyContact usLogin
The announcement of Nyrstar’s decision to declare force majeure at its Port Pirie smelter in Australia sent lead futures surging on Thursday.
Over the morning session however, the three-month lead price reached a low of $1,855 per tonne, while volumes have been moderately high over the morning, with more than 1,500 lots traded as of 10:15am London time.
Lead’s forward curve also remains tight, with its cash/three-month spread continuing to trade in a backwardation of $21.50 per tonne, while its nearby cash-July spread was recently seen in a backwardation of $37 per tonne.
“The strong reaction of the lead price to this [Port Pirie] news is partly due to the fact that lead stocks in the LME’s warehouses recently declined to a ten-year low. Market participants are becoming increasingly concerned that the global lead market is undersupplied,” Commerzbank Research said in a morning note.
“The lead forward curve at least does indicate a shortage; it has turned significantly into backwardation at the front end in recent days. The rise in the lead price also pulled the zinc price up with it; the latter has regained the $2,500-per-tonne mark,” it added.
Elsewhere, tin’s three-month price is continuing to climb despite an uptick of more than 80% in LME stocks over the May period.
The three-month tin contract is now above $19,400 per tonne and reached a high over the morning of $19,500 per tonne, trading more than 4.5% higher than last week, when price action dipped to around $18,600 per tonne.
Despite recent inflows into LME warehouses, Chinese customs data now shows that imports of tin concentrates – predominantly sourced in Myanmar – into China, the world’s largest tin producer and exporter, were down by around 20% year on year in April, indicating supply pressure.
In addition, exports from Indonesia, the world’s second largest tin producer after China, remain subdued, with state-owned PT Timah continuing to exhibit dominance in the market.
Other highlights