LEAD TODAY: Price extending towards February high

Equity markets made a mixed start on Friday after authorities tightened oversight on online financial service platforms while the latest manufacturing data missed consensus expectations.

LME warehouse lead stocks totaled 110,850 tonnes on April 30, down from a recent peak of 124,950 tonnes on March 15, following a spate of inflows. After fresh cancellations recently, 18.4% of stock is now booked for removal.

Shanghai Futures Exchange lead stocks totaled 61,044 tonnes on April 30 compared with a recent low of 36,994 tonnes. Growing seasonal scrap supply will allow secondary smelters to raise their capacity utilization rates.

In the physical market, lead premiums in the United States remain supported at multi-year highs, with rebounding activity in the automotive sector and the closure of a Clarios battery recycling center in Florence tightening availability. Local premiums could face further upside pressure amid concerns surrounding the Gopher Resource Tampa plant, where the Occupational Safety and Health Administration has began an inspection for the first time in five years.

Despite short-term headwinds, light-vehicle sales in the US accelerated to an annualized 18.5 million vehicles in April, the strongest pace since September 2017, according to consultancy Ward’s Intelligence. Consultancy LMC Automotive forecasts global light vehicle sales could increase to 86 million vehicles in 2021 from an estimated 77 million vehicles in 2020, although this is still below the 90 million vehicles sold in 2019.

Still, the lack of price traction relative to the rest of the base metals reflects concerns about the impact of rising penetration by new-energy vehicles. Boston Consulting projects EVs will account for more than half of light vehicles sold across the globe by 2026. Despite the shift in vehicle powertrains, new energy vehicles will still require lead-acid batteries to power the vehicle’s electrical systems.

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