LONDON (Reuters) – China imported 128,000 tonnes of refined lead last year, bringing the two-year cumulative total to 206,000 tonnes. The only precedent for this pace of import was 2009, when China soaked up 157,000 tonnes of refined lead.
It’s a problematic comparison though, given lead prices and arbitrage were distorted back then by the global financial crisis and Beijing’s resulting rush to support its own producers. The import surge dried up in 2010 and China became a net exporter of refined lead to the rest of the world over the 2013-2016 period.
The scale of imports since then is a clear sign there is a real physical shortfall in China, normally the sort of narrative to excite metals bulls. This being lead, however, you’d be hard pushed to discern even the faintest flicker of bullish enthusiasm in either the Shanghai or London futures markets.
The London Metal Exchange (LME) lead contract is currently stable, but as long as China’s appetite remains this strong, there could yet be a bull storm brewing. China is both the largest producer and consumer of lead, as is the case with many industrial metals.
Lead’s dominant usage in automotive batteries leaves it exposed to the downturn in China’s automotive sector. Automobile sales dropped another 15.8 percent in January, marking the seventh straight month of decline in the world’s largest auto market.