LEAD prices have recorded another all-time high on the London Metal Exchange overnight with the outlook for the metal to remain robust, according to Fat Prophets analyst Gavin Wendt, as export problems in Western Australia take hold.
The metal's spot price reached a new high of $US3125 per tonne while its three-month delivery price recorded $3100t.
At the end of the session at the LME, spot price had cooled to $3112/t – up $67.50 or 2.2% - and its three-month price had dipped to $3090/t, a climb of $60 or 2%.
The spot and three-month prices for the metal has jumped 80% since the start of the year, on supply concerns compounded by lead export situations in WA and the Chinese government's recent introduction of a 10% export tax on the commodity.
"The short term prospect for lead looks pretty good," Wendt told MiningNews.net.
Lead stockpiles according to the LME have dropped from a year ago, when lead levels were at around 109,000t.
The LME reported lead stockpiles were currently at 41,575t.
"At the moment we're seeing supply affected by the problems in the West with exports from Ivernia being restricted because of these environmental issues, but that's in the short term and that's what's known, we don't know when that's going to be resolved," Wendt said.
"Its fear of the unknown in commodities that always tends to spook markets and spook prices."
Earlier this year Ivernia subsidiary Magellan Metals was banned by the Department of Environment and Conservation (DEC) from shipping lead from the Esperance port, where the deaths of thousands of birds was linked to lead poisoning.
Magellan – the only company to ship lead from the port – supplies around 3% of worldwide lead, which is predominately used in car batteries.
"Really we're seeing the fundamentals applying to some of the other base metals now starting to trickle through to lead, and what's exacerbating that is the problems on the Ivernia front which supplies around 3 percent of the world's lead, and demand for lead is going up due to motor vehicle demand," Wendt said.
"Given the nature of its demand, it's reasonably robust."
Also compounding the lead situation is the WA Government's investigation of the environmental and health standards of all major ports in the state.
Oxiana, which ships lead containing concentrate from its Golden Grove mine through the Geraldton port, said it was cooperating with DEC investigations that found elevated lead levels on machinery used to handle the metal.
"We're going to see a steady, solid uptrend in prices," Wendt said.
Wendt added the longer term point of view of the metal will see a production shortfall this year between 10,000t-15,000t. This would be its sixth consecutive year of supply shortfalls. The metal's price could see a steady, upward movement of around 3-4% a year.
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And so, as per comments from the "stock resource" report:
Therefore the company needs to demonstrate a stronger financial outlook and this is expected to emerge as the company releases details on its long awaited Intec Hellyer Residues Project. There has been a market expectation that the company would have already announced a go-ahead for this 10,000tpa zinc sulphide project but we understand that modifications to the project will now allow it to process the tailings from the Hellyer tailings project (HZCP) to add lead production to the planned zinc production. Hence, the company claims that this first commercial application of the Intec Process will involve: �� Feedstock 1: 25,000tpa Electric Arc Furnaces Dusts (EAF) and: 56,000tpa lead sulphide extract from the cleaner tails of the Intec Hellyer Mill �� Product: 10,000tpa high-grade ZnS (6,500t zinc metal) and 13,000tpa PbS (10,600t lead metal) Therefore the company has the opportunity to increase its revenues through the addition of 10,600t of lead metal and which could contribute an additional A$25m pa in revenue. The company is planning further testing at the Burnie demonstration plant later this year.
Would be nice to get an update on this from Intec..
SDV Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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