IKN

So what’s going on? Well, basically there’s plenty of concentrate being mined but the problem for manufacturers that use the metal is getting pure metal, especially battery-grade lead, as there’s a smelter supply squeeze happening. The combination of the smelter shutdown in China due to environmental pollution (the recent case of hundreds of children with lead poisoning has closed down a large smelting zone) and the ongoing strike at Peru’s Doe Run (DRP) complex at La Oroya mean there’s less lead out there, right at a time when real, end-user demand seems to be picking up.

The absolute amount of outage in China is difficult to gauge (and if the local China experts are guessing , that means your humble correspondent has zipsquat idea) but it’s clearly larger than DRP, which in itself produces 3.1% of world mined lead per annum (using 2008 figures) and around 1.4% of total world supply (the big difference explained by the fact that a lot of lead is recycled).

So moving forward, word of smelters reopening in either place will move the market more than end demand numbers, at least in the short term. DYODD.