Lead slips to 3-week low as Chinese output rises

LONDON — Lead prices fell on Wednesday as rising stockpiles in China and falling premiums for nearby material on the London Metal Exchange (LME) pointed to a better supplied market.

Benchmark lead on the LME closed down 1.8% at $2,115 a ton after touching $2,101, the lowest since Oct. 3.

A deficit and dwindling stockpiles had pushed the price of the metal — which is used in batteries — to a 15-month high of $2,265.15 last month.

But recycled output is rising in China, the biggest producer, and demand is weak with a US-China trade war slowing economic growth, said CRU analyst Dina Yu.

The most traded lead contract on the Shanghai Futures Exchange has tumbled to its lowest since July.

That is pulling down LME prices, said ING analyst Wenyu Yao, predicting that prices will average $1,965 a ton next year.

Lead inventories in ShFE warehouses have ticked up to 21,411 tons from around 15,500 a month ago.

Headline stockpiles in LMEregistered warehouses at 70,000 tons are also up from 10-year lows around 55,000 tons in July.

The premium for cash lead over the three-month contract on the LME has fallen to $2 from around $20 a week ago, suggesting the market for nearby metal has loosened.

The roughly 12-million-ton global lead market will switch to a 55,000-ton surplus in 2020 from a deficit of 46,000 tons this year, the International Lead and Zinc Study Group said last week.

The US and China are working to narrow their differences enough to sign a “phase one” trade deal as early as this month.

German industrial orders and euro zone business activity performed slightly better than expected, but the outlook remains poor.

China issued a sixth batch of quotas for imports of restricted types of scrap metal, including for 11,110 tons of high-grade copper scrap.

Benchmark aluminum ended flat at $1,810 a ton as the cash LME contract flipped to a premium against three-month metal for the first time since January 2018, indicating tighter nearby supply.

Among other industrial metals, LME copper finished down 0.6% at $5,907 a ton; zinc fell 0.9% to $2,475; tin gained 0.7% to $16,565; and nickel closed 0.2% lower at $16,245. —