Lead prices remain on a steady, well-established upward trend, reflecting tighter fundamentals. The high, so far, this year was $2,685 per tonne on February 2. After that things wobbled, reversing to $2,480 per tonne, but quickly rebounded back into the $2,600s. The speed and extent of the rebound suggest there is strong underlying buying appetite, which bodes well for the continuation of the uptrend.
This is especially so now that LME stocks are falling at a faster pace. Outflows have averaged over 1,400 tonnes per day in February to the time of writing, compared with 575 tonnes per day in January. The last time stocks were at current levels, around 115,000 tonnes, was in August 2009. SHFE stocks are also trending lower again. Given our expectations for another annual supply deficit this year, and again next year, the fundamentals will further tighten and so the overall uptrend in prices should continue. We are looking for lead to trade into the $2,700-2,900 per tonne range before long.
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