Get ready to capitalize on the dynamic world of base metals with our exclusive 2024 Outlook Report. From copper to zinc, we delve into market dynamics, price forecasts, and key drivers influencing the sector.”
“Global nickel consumption is expected to increase due to recovery of the stainless steel sector and increased usage of nickel in EV batteries. Batteries now account for almost 17 percent of total nickel demand, behind stainless steel.”
— Ewa Manthey, ING
“We expect zinc’s price to be supported by concentrate market tightness in 2024, although the prospect of refined metal surpluses is likely to constrain bullish sentiment.”
— Helen O’Cleary, CRU Group
The Investing News Network is a growing network of authoritative publications delivering independent, unbiased news and education for investors. We deliver knowledgeable, carefully curated coverage of a variety of markets including gold, cannabis, biotech and many others. This means you read nothing but the best from the entire world of investing advice, and never have to waste your valuable time doing hours, days or weeks of research yourself.
At the same time, not a single word of the content we choose for you is paid for by any company or investment advisor: We choose our content based solely on its informational and educational value to you, the investor.
So if you are looking for a way to diversify your portfolio amidst political and financial instability, this is the place to start. Right now.
With 2023 over, what does 2024 have in store for copper and copper producers? The Investing News Network (INN) asked experts in the sector to share their thoughts on what will move the market over the next 12 months.
Copper’s future is often described as strong long term, but potentially weak short term. Now that may be changing.
“Most analysts are modeling growing deficits in the copper market balance by 2027-2028, with a near-term forecast (2024-2026) hinting at surpluses until then; however, recent developments suggest a shift toward deficits by late 2024 due to production shortfalls by large producers,” Joe Mazumdar of Exploration Insights told INN by email.
Independent metals and mining consultant Karen Norton shared a similar sentiment, telling INN, “Supply growth is likely to be more constrained than previously anticipated with the suspension of the sizable Cobre de Panama mine and the cut to guidance by Anglo American.” She also said the economic backdrop may keep demand in check through H1.
Little new copper output will be available to fill the holes left by these large producers.
“Given the lead time for new projects and forecasts for much stronger demand after the middle of the decade, a gap looks to be looming with not enough mines being developed and insufficient exploration for the longer term,” Norton said, noting that rising recycling rates are likely to fill some of the gap, along with substitutions and thrifting.
Cost challenges for getting operations off the ground aren’t helping copper companies.
“The copper market is in a low capital cycle as mining companies reduced their capital expenditures by 55-60 percent from the most recent peak of ~US$120 billion in 2012,” Mazumdar explained to INN. “Despite limited significant copper projects under construction, the ones being built need help with capital overruns.”
Teck’s Quebrada Blanca expansion is one operation that was affected. “The project’s capital expenditures have risen by US$600 million to US$8.6 billion to US$8.8 billion due to construction delays at the molybdenum plant and port facilities and the risk of contract claims,” Mazumdar said. “Therefore, the risk of capital expenditure overruns poses a hurdle for developing or expanding projects unless there’s a substantial rise in the copper price.”
Copper is facing uncertainty in 2024 as expectations for a surplus turn into a possible deficit.
“With the market now looking more finely balanced, prices are likely to prove more susceptible to broader swings in either direction in the advent of significant news that affects the market,” Norton commented. “Overall, while the range might be wider than the fundamentals previously suggested, the annual average may not be that much different to 2023, although the improving economic picture should see it end the year stronger.”
In the near term, that means capital difficulties could continue for producers that are at critical phases in their expansion and development plans, or exploration companies looking to fund projects.
Beyond 2024, however, with increasing shortfalls in mining supply, the price of copper could start to head higher, which would in turn help the business side overcome obstacles in the current cycle.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Copper prices on the London Metal Exchange (LME) saw upward momentum in the first quarter of the year on the back of tightening supply and increasing demand from the energy transition.
After bottoming out at US$7,800 per metric ton (MT) in the fall of 2023, copper prices bounced back to start 2024 in higher territory, but elevated supply kept the red metal trading in the US$8,000 to US$8,500 range until mid-March.
Since then, copper has seen strong gains, reaching a quarterly high of US$8,973 on March 18. With increasing market volatility since the start of April, prices continued trending up to reach US$9,365 on April 10.
At the time, independent metals and mining consultant Karen Norton told the Investing News Network (INN), “With the market now looking more finely balanced, prices are likely to prove more susceptible to broader swings in either direction in the advent of significant news that affects the market.”
Copper price, Q1 2024.
In an email to INN at the beginning of April, Exploration Insights Editor Joe Mazumdar said, “The concentrate market balance is accurately reflected in the fall of TC/RCs. To ensure the profitability of the domestic smelters, the Chinese manufacturers have decided to cut production, bring maintenance work forward and/or delay further expansions.”
According to Mazumdar, the cuts to smelter capacity will begin to put pressure on the availability of refined stockpiles and push copper closer to a deficit position sooner than expected.
This supply bottleneck caused significant gains for the metal’s price through the last half of March and into April.
While this is largely good news for copper producers as high prices and low TC/RCs improve margins, Mazumdar thinks the price will need to stay elevated to have any real impact on investment into the industry.
The event that has had the biggest impact on copper supply recently is the closure of the Cobre Panama mine in Q4 2023. The mine’s annual output of 331,000 MT of copper accounted for 1 percent of global production — a significant number for an industry set to face increasing demand and a lack of incoming new supply.
Panama will be holding elections in May as Cortizo completes his second and final term, meaning the country will soon have a new administration. Mazumdar told INN that First Quantum intends to negotiate with the incoming administration in the hopes of striking a deal that is favorable to both parties.
“The current president will not stand in the next election in May 2024; therefore First Quantum plans on working with whomever is elected to try and restart the mine and avoid the arbitration. Cobre Panama represents about 5 percent of the GDP of Panama and employs 30,000 to 40,000 people directly and indirectly,” he said.
Among its goals is advancing critical minerals projects that meet ESG standards.
Ultimately, the goal of the MSP, the IRA and other regional programs is to help accelerate critical minerals projects by working with government and industry to help secure funding, provide diplomatic support and diversify supply chains.
Copper’s supply stresses look likely to continue in 2024 and beyond due to a lack of new supply in the pipeline, and slow permitting times for assets that are underway. At the same time, the red metal is expected to see higher demand from renewable electricity generation, electric vehicle production and increasing infrastructure needs.
However, now that more governments are labeling copper a critical mineral, there’s hope that bottlenecks in supply may lessen and new projects may be able to make progress. Overall, a landscape is emerging that could benefit investors who are looking for long-term plays in an industry facing immense supply-side constraints in the coming years.
Still, given the challenges in discovery, permitting and approval, investors should do their due diligence, researching all aspects of a company, including its biggest projects and the risks associated with them.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Nickel started 2023 high after a rally at the end of 2022, but supply and demand pressures saw the base metal’s price decline throughout the year to close nearly 50 percent lower at US$16,375 per metric ton (MT).
Production has increased rapidly in recent years, and oversupply played a big role in nickel’s 2023 price dynamics. Indonesia in particular has ramped up its output and now accounts for more than 50 percent of global nickel supply.
Excess supply was compounded by weak demand out of China, which has continued to struggle since ending its zero-COVID policy in January. China’s central bank is now working to stimulate the economy to prevent runaway deflation.
What does 2024 have in store for nickel? The Investing News Network (INN) spoke to experts about what could happen to the metal in the next year in terms of supply, demand and price. Read on to learn their thoughts.
Nickel is coming into the year with a holdover surplus from 2023. This glut has mainly come from an increase in Class 2, lower-purity nickel produced in Indonesia, but it’s also been driven by an increase in the production of Class 1, higher-purity product from China. The former category, which includes nickel pig iron and ferronickel, is used in products such as steel, while the latter is necessary to create nickel sulfate and nickel cathodes for electric vehicles (EVs).
Against that backdrop of higher supply, both nickel products have also faced decreased demand.
The resulting oversupply concerns have been reflected in core metals markets, and Ewa Manthey, commodities strategist at ING, told INN that nickel has the largest short position of the six London Metal Exchange (LME) base metals.
The International Nickel Study Group (INSG), an intergovernmental body consisting of government and industry representatives, met in October to discuss the current state and outlook for the nickel market.
Even though the INSG expects demand to grow from 3.195 million MT in 2023 to 3.474 million MT in 2024, production is still anticipated to be higher, rising from from 3.417 million MT in 2023 to 3.713 million MT in 2024.
At the outset of 2023, experts thought Chinese demand for nickel would increase as the country ended its strict zero-COVID policy. China’s construction industry is a key consumer of nickel, which is used to make stainless steel.
However, the recovery was slower than predicted, and demand from the real estate sector never materialized.
“China’s flagging recovery following COVID lockdowns has hurt the country’s construction sector and has weighed on demand for nickel this year,” Manthey explained to INN.
Even so, the INSG’s October forecast indicated that demand for stainless steel was set to grow in the second half of 2023, and the group was calling for further growth in 2024.
While the Chinese real estate market is a key factor in nickel demand, it’s not the only one.
The expanding EV sector is also a growing purchaser of nickel. “Global nickel consumption is expected to increase due to recovery of the stainless steel sector and increased usage of nickel in EV batteries,” Manthey said. “Batteries now account for almost 17 percent of total nickel demand, behind stainless steel.”
As a cathode material in EV batteries, nickel has become a critical component in the transition away from fossil fuels, which the expert anticipates will help its price in the future.
“The metal’s appeal to investors as a key green metal will support higher prices in the longer term,” she said.
This means that for now, NMC batteries will remain an essential part of the EV landscape.
Following its near 50 percent drop in 2023, the nickel price is expected to be rangebound for most of 2024.
“While LME nickel prices are expected to find support from a weaker US dollar in 2024 as the Fed eases monetary policy, we expect prices to remain subdued next year as further primary nickel output growth from Indonesia and China keeps the market in a surplus for the third consecutive year,” said Jason Sappor of S&P Global Commodity Insights.
Sappor suggested that the nickel surplus and the metal’s rangebound price may prompt producers to reduce their output. “Nickel prices have sunk deeper into the global production cost curve, raising the possibility that the market could be hit by price-supportive mine supply curtailments,” he said.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Blackstone Minerals, Falcon Gold and FPX Nickel are clients of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
With the first quarter in the books, that story seems to largely be playing out. After opening the year at US$16,600 per metric ton (MT) on January 2, nickel was stable during January and February. However, March brought volatility to the sector, with strong gains pushing the base metal to a quarterly high of US$18,165 on March 13.
Nickel’s price rise failed to hold, and it once again dropped below the US$17,000 mark by the end of the month. Ultimately, the metal fell to US$16,565 on March 28, resulting in a slight loss for the quarter.
Lackluster pricing in the nickel market is largely the result of the metal’s ongoing oversupply position.
Indonesia’s output has climbed exponentially over the past decade, and has been exacerbated by government initiatives that placed strict limits on the export of raw materials to encourage investment in production and refinement.
In an email to the Investing News Network (INN), Exploration Insights Editor Joe Mazumdar wrote, “The growth in electric vehicle (EV) production and the escalating demand for nickel in batteries prompted the Indonesian government to mandate increased local refining and manufacturing capacity from companies operating in the country.”
A report on the nickel market provided by Jason Sappor, senior analyst with the metals and mining research team at S&P Global Commodity Insights, shows that short positions began to accumulate through February and early March on speculation that Indonesian producers were cutting operating rates due to a lack of raw material from mines.
According to Macquarie Capital data provided by Mazumdar, 35 percent of nickel production is unprofitable at prices below US$18,000, with that number jumping to 75 percent at the US$15,000 level.
Nickel price, Q1 2024.
Meanwhile, the nickel industry in French territory New Caledonia is facing severe difficulties due to faltering prices.
While cuts from Australian and New Caledonian miners aren’t expected to shift the market away from its surplus position, Mazumdar expects it will help to maintain some price stability in the market.
“The most recent forecast projects demand (7 percent CAGR) will grow at a slower pace than supply (8 percent CAGR) over the next several years, which should generate more market surpluses,” he said.
In an email to INN, Ewa Manthey, commodities strategist at financial services provider ING, suggested western nickel producers are in a challenging position, even as they make cuts to production.
“The recent supply curtailments also limit the supply alternatives to the dominance of Indonesia, where the majority of production is backed by Chinese investment. This comes at a time when the US and the EU are looking to reduce their dependence on third countries to access critical raw materials, including nickel,” she said.
This was affirmed by Mazumdar, who said the US is working to combat the situation through a series of subsidies designed to encourage western producers and aid in the development of new critical minerals projects.
“The US Inflation Reduction Act promotes via subsidies sourcing of critical minerals and EV parts from countries with which it has a free trade agreement or a bilateral agreement. Indonesia and China do not have free trade agreements with the US,” he said. Mazumdar went on to suggest that the biggest benefactors of this plan will be Australia and Canada, but noted that with prices remaining depressed, multibillion-dollar projects will struggle to get off the ground.
The calls for a premium have largely come from western producers that incur higher labor and production costs to meet ESG initiatives, which is happening less amongst their counterparts in China, Indonesia and Russia.
As the nickel market faces strong production from Indonesia, experts expect more of the same for prices.
“Looking ahead, we believe nickel prices are likely to remain under pressure, at least in the near term, amid a weak macro picture and a sustained market surplus,” Manthey said. The continued surplus may provide some opportunities for investors looking to get into a critical minerals play at a lower cost, but a reversal may take some time.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Zinc started 2023 in a strong position, having come close to all-time highs in April 2022.
However, zinc fell in H1 amid a rout in the base metals market. While smelting and supply issues from 2022 supported the price early on, weak demand, particularly due to a slower economic recovery in China, caused zinc to move from undersupplied to oversupplied by the end of the year. The vast majority of zinc is used in alloys and for galvanization.
After dropping in the first half of 2023, zinc remained largely rangebound for the rest of the year, staying below the US$2,700 per metric ton (MT) level. Read on to learn more about what factors impacted the market during the period.
Zinc price from January 3, 2023, to December 29, 2023.
However, falling demand and rising supply added downward pressure to the price of zinc, sending it down to US$2,248.50 on May 31 — its lowest since September 2020 and ultimately its low point for 2023.
Zinc rebounded through the second half of August and into September to reach a Q3 high of US$2,649.50 on September 29; it remained rangebound between US$2,400 and US$2,660 through the fourth quarter.
The price of zinc closed out 2023 at US$2,658 on December 29.
2023 was a relatively lackluster year for zinc. High interest rates, an inflationary environment and a sputtering Chinese economy provided for the perfect storm to stall demand for the metal. Meanwhile, supply remained high, causing zinc to be the second worst-performing metal on the LME after nickel.
Temporary mine closures in 2024 are expected to constrain zinc supply, but it remains to be seen how prices will be affected and whether demand will pick up.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
2023 saw the zinc price take a slide as the market entered surplus territory.
In terms of prices, BMI Research predicted in early 2023 that zinc would average US$3,000 per metric ton (MT) for the year; it revised its forecast down to US$2,550 midway through the period. Zinc closed the year at US$2,658.
Base metals price declines are expected to continue in 2024 amid depressed global economic activity.
On the demand side, various factors that weighed on zinc in 2023 are seen persisting in the new year, including challenging global economic conditions; in particular, high interest rates in North America and Europe have dragged down overall investment in real estate and capital projects, hurting base metals usage.
China’s slow post-COVID recovery is also pushing demand for zinc lower. The country’s real estate and manufacturing sectors stumbled through much of 2023, and although stimulus measures created some momentum toward the end of the year, the full effects are unlikely to be seen until the second half of 2024.
“Renewed concerns over the growth outlook for China next year given real estate sector weakness is acting as a drag on base metals prices. Our expectation is that interest rates in the US and Europe will not start to fall until 2024 Q2,” Helen O’Cleary, CRU Group’s principal analyst, base metals, told INN via email.
However, downward pressure caused by oversupply in the refined zinc market is likely to be met with zinc concentrate deficits in 2024. “We expect zinc’s price to be supported by concentrate market tightness in 2024, although the prospect of refined metal surpluses is likely to constrain bullish sentiment,” said O’Cleary.
Industry participants may have to make choices to ensure the financial viability of their operations. “Refined metal premia also slumped in 2023, and this, coupled with lower treatment charges, is putting pressure on smelters. Price-related smelter cutbacks cannot be ruled out, and this would be bullish for zinc’s price in 2024,” she added.
Additionally, even though central banks are working to get interest rates down to 2 percent, high levels are currently weighing on the real estate sectors in Europe and North America. Elevated rates are also hurting capital investment across diverse business sectors, including the metals and mining industry.
It’s important for investors to keep these factors in mind as they make decisions for their portfolios in the coming year.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
The iron ore market was racked with volatility once again in 2023 as prices rallied, dropped steeply and then rallied again to an 18 month high. Activity in China was a key driver for the sector in that time.
Given its strength and malleability, iron ore is one of the world’s most important industrial metals. While it has many applications, its primary use is in the production of steel, meaning that it responds to economic activity.
As the new year approaches, the Investing News Network (INN) spoke to experts about the main trends in the iron market in 2023 and what the iron ore forecast is for 2024. Read on to learn what they had to say.
Iron ore prices hit US$128 per metric ton (MT) in March, but then fell as low as US$105 in May as concerns about a global economic recession dampened the outlook for steel production.
China’s property sector woes were especially troubling for the steel market, and hence iron ore.
“China’s slowdown in 2023 has surprised the commodity market to the downside,” David Cachot, research director on Wood Mackenzie’s metals and mining team, told INN. “In the domestic market, the property recession, rising local government debt and poor consumer and investor confidence threaten China’s economic growth.”
“Markets were disappointed by the weakness of the economy and by the lack of stimuli measures. However, strong steel exports offset weak domestic demand and supported iron ore demand,” analysts at Project Blue informed INN via emailed correspondence. “In 2023, steel exports have been increasing by approximately 35 percent, mainly due to a weak yuan. It offset the weak domestic demand, pushing up steel production and iron ore demand.”
By mid-December, iron ore prices were back up to US$138 for the first time in a year and a half.
“Iron ore prices have been rallying since August. Fresh Chinese fiscal stimulus to shore up China’s economic recovery significantly impacted iron ore prices,” Cachot explained to INN. “Iron ore prices are once again defying expectations and are notably diverging from recent years’ seasonality.”
Another factor contributing to strong steel production in the face of a weak economy in 2023, according to Project Blue, was the Chinese government taking “a laxer stance” on environmental restrictions impacting steel production.
Wood Mackenzie’s Cachot agreed. “In addition, the lack of restrictions on steel output — as economic growth is prioritized and as Beijing appears willing to guarantee support to the largest troubled developers — has further fueled the recent sentiment-driven surge in iron ore,” he noted.
What trends and catalysts are likely to influence iron ore supply and demand in 2024?
“Iron ore demand will be, as always, driven by China steel production, and implicitly by China’s macro environment as well as by the property sector,” Project Blue’s analysts said. In addition, the firm said Chinese steel exports, port stocks and environmental regulations will continue to be important factors to watch in 2024.
Cachot said Wood Mackenzie expects to see near-term steel demand in China remain weak. “However, the destocking of iron ore at Chinese ports over the last six months is providing some fundamental support to prices,” he added. Iron ore restocking at Chinese steel mills is likely ahead of Chinese New Year.
A spike in iron ore prices is possible in Q1 if the Chinese steel export levels experienced by the market in 2023 continue into the new year, and if port stocks remain at low levels and are pushed below 100 million MT, Project Blue said.
Outside of China, iron ore supply is typically weaker in the first quarter of the year due to historically low seaborne shipments during the cyclone season in Australia and the rainy season in Brazil — the top two iron-producing countries. Both Project Blue and Wood Mackenzie see this as another supportive factor for iron ore prices in early 2024.
Another important point to watch for the iron ore market in 2024 is of course China’s fiscal stimulus measures. “Additional fiscal measures aiming at stimulating domestic consumption and the property market would be positive for the construction sector, steel production and iron ore demand,” Project Blue noted.
While it’s difficult to forecast how much of an influence this may have on steel production and iron ore demand, market watchers may see signs emerging, particularly in Q1 when China’s construction season kicks off.
Cachot is less bullish on demand from a recovery in China’s property market, which he sees as the most critical downside risk for iron ore prices in 2024. “The market continues to bet on China’s policy support to boost downstream steel demand. However, subdued property investment and land sales suggest a further decline of new starts in 2024 and the years ahead, weighing on our steel demand forecast,” he explained. “Having said that, positive growth momentum in infrastructure and manufacturing will partially offset the demand loss, as will a vigorous automaking sector.”
Cachot expects iron ore demand outside of China to improve in 2024, especially with healthy demand from India and a recovery of the steel sector, although subdued, underway in Europe.
On the supply side, the outlook for 2024 seems more predictable than demand.
Cachot said Wood Mackenzie views mine supply as a short-term risk in its iron ore forecast, but with upside coming from labor, logistics and weather disruptions. More stringent ESG operating standards are also a supply-side factor. “We expect supply and trade constraints to remain a feature of markets in 2024. Mine replacement to sustain record iron ore production levels is becoming more challenging in the ESG environment miners now operate in,” he said.
Wood Mackenzie’s iron ore price forecast on a 62 percent Fe fines basis, CFR China, is pegged at US$110 for 2024 and US$100 for 2025.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Lead prices yo-yoed in 2023 as global uncertainty continued to drive volatility.
The industrial metal is an important material for pigments, weights, cable sheathing and ammunition, but its largest area of application by far has traditionally been in lead-acid batteries.
The rise of electric vehicles (EVs) is expected to weigh on demand for this battery type; however, EV manufacturers still use lead-acid batteries to power electrical systems, including lights, windows, navigation, air-conditioning and airbag sensors. Lead-acid batteries also have a role to play in renewable energy storage systems.
On the supply side, lead is typically mined as a by-product of zinc, silver and to a lesser extent, copper. Demand changes and mining disruptions for these metals can play an outsized role in shaping lead sector dynamics.
As 2024 approaches, the Investing News Network (INN) is looking back at the main trends in the lead space in 2023 and what’s ahead for prices, supply and demand in the new year. Read on to learn what experts see coming.
Although they started off the year above the US$2,300 per metric ton level, lead prices quickly shed nearly 11 percent in the first three weeks of 2023 on concerns about weak demand.
“Strong OE automotive figures were also supportive on the demand side of lead’s market fundamentals. However, the wider macroeconomic picture has been less robust recently, particularly in China,” the firm states in a June report.
Lead prices hit their lowest point of the year on December 7, coming in at US$1,973.
Lead’s price performance in 2023.
Worldwide lead mine production rose by 1.5 percent and lead metal production was up by 2.8 percent over the same period in 2022, while consumption of the metal rose by a mere 0.3 percent.
Heading into 2024, what supply and demand factors are expected to drive prices for lead?
Looking over at global refined lead supply, the ILZSG sees a 2.3 percent increase to 13.14 million metric tons in 2024; that’s compared to a 2.7 percent increase on the books for 2023 and a 1.7 percent decline in 2022. The restart of Trafigura’s Stolberg smelter in Germany is expected to contribute to increased refined lead supply for 2024.
As a by-product metal, global supply of lead is also tightly tied to zinc mine production. A too-low price environment for zinc can prompt miners to curtail operations as the cost of production eats into their margins. In 2023, zinc has been the second worst-performing metal on the LME after nickel due to a massive supply overhang amid stilted demand.
With economic uncertainty still weighing on global markets, that supply imbalance is expected to remain. “Regarding the global market balance, the Group anticipates that global supply of refined zinc metal will exceed demand in both 2023 and 2024 with the extent of the surpluses forecast at 248,000 tonnes and 367,000 tonnes respectively,” states the ILZSG.
What about global demand for lead? “Demand-wise, much will depend on the strength of the automotive sector, the health of China’s industrial sector and the pace of monetary easing in western economies,” said Solanes.
The rising cost of living in many countries due to growing inflation and higher interest rates will still be front and center heading into 2024, which will no doubt hamper consumer demand for vehicles.
“2024 is expected to be another year of cagey recovery, with the auto industry moving beyond clear supply-side risks, into a murkier macro-led demand environment,” Colin Couchman, executive director of global light vehicle forecasting for S&P Global Mobility, states in the firm’s report.
However, demand for refined lead metal in China is forecast to grow by 2.4 percent in 2024 after projected demand growth of 1.9 percent in 2023, according to ILZSG data. That’s compared to a significant 2023 decline of 6.4 percent in the US; a recovery of 3.1 percent is forecast in the country for 2024.
On a global scale, demand for refined lead metal is set to increase by 2.2 percent in 2024 after a 1.1 percent increase in 2023. Demand for lead is also expected to rise in India, Japan and Korea.
Despite these increases in demand, the ILZSG “anticipates that global supply of refined lead metal will exceed demand by 35,000 tonnes in 2023. In 2024, a larger surplus of 52,000 tonnes is expected.”
What other key trends and catalysts should investors look out for in the lead market in 2024?
“Stimulus policies in China will be a key short-term catalyst of demand for the metal. Timely and substantial support to the industrial and property sector would boost lead prices,” Solanes explained.
Over the longer term, the transition away from fossil fuels to renewable energy sources presents an avenue of demand in the lead market. “The main underlying trend to monitor is the switch to green and electric energy, as lead-acid batteries are widely used to power both low-voltage and renewable energy systems,” added Solanes.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Galena Mining is a client of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Leave a Reply