Ann: Recommissioning Paste Plant and Mine Ramp Up, page-6

re: Ann: Recommissioning Paste Plant and Mine... Automobile industry to support lead in 2010
December 29, 2009 17:15:00 IST

Lead is likely to gain a modest momentum in 2010 as the demand from automobile industry and battery are expected boost across the globe, particularly in China and India. In 2009, lead remained stagnant due weak global economic arena.

Experts envisage a good year for lead as the financial bubble is slipping away and the emerging economies are bringing out new industrial tactics to beat the New Year. Besides, the measures by the governments and central banks will help 2010 to be a much better year.

A major booster to all the metals is that the demand is improving in manufacturing and end usage is now far better than at the start of the year or origin of recession in late 2007.

Lead which takes its triggers from automobiles and battery sales will seek green pastures due to high imports of China and increasing demand of automobiles in India. Society of Indian Manufacturer's Association data suggest that, Passenger Vehicles segment during April-November 2009 grew at 21.21 percent over same period last year.
Both lead and zinc have tracked the copper price in the past month, since their supply-demand fundamentals are not as negative as those for the rest of the base metal's complex.

Neither metal has the huge overhang of surplus stocks, as measured by days of consumption, as aluminium and nickel, nor are they capped in the same way as the smaller tin market. But looks can be deceptive - exchange inventories, although lower when measured in days of consumption, are still growing, and previously idled output and new supply is coming online.

In lead's case, China's new lead smelting standards, which will apply from February 2010, will - as we predicted - avoid the massive closures that were feared, and enable the restart of much of the capacity that was shut in August this year.

The new rules remove much of the support that has seen the lead price outperform in the past few months, pushing it from $1,700/t in June to more than $2,300/t in November; as Chinese lead output recovers the enticement for fresh speculative investment to enter the lead market ought to be rather less.

The lead price will remain well supported for the next few months, despite the resumption of previously suspended lead smelting capacity in China. But by the end of Q1 2010, when demand softens, we expect the price to slip. Zinc looks a good bet to outperform in 2010, alongside copper, posited on OECD demand strongly recovering.

Passenger Cars grew by 22.06 percent, Utility Vehicles grew by 12.15 percent and Multi Purpose Vehicles grew by 31.46 percent in this period. The automobile segment is likely to sustain the growth patterns seen during 8 months.

As we write Lead prices are quietly trading at Rs 111 per kg with returns of 92% so far in the year 2009. At the start of the year one has seen levels of Rs 58. Coming days can embark further buying opportunities on dips, with price targets of Rs 120 per kg.

During 2009, Demand for e-bikes in China faced pressure due to change of norms by the Chinese government. Incidents of Lead poisoning were also a setback for major Lead producing region of China.