Our base-case cash price forecast for lead had been for an average of $2,610 per tonne in Q2. But at the halfway point of the quarter, prices were averaging just $2,342 per tonne. The underperformance came after a weaker-than-expected period in April, and some spill-over from zincs sell-off.
This encouraged us to lower our Q2 base-case forecast to $2,450 per tonne, though that still allowed for a bullish end to May and a stronger June with trading envisaged to return to a range above $2,400 per tonne.
Indeed, prices are rallying again as we write, attempting to re-establish themselves back above this level. The improvement in price sentiment has been brought about by tightness emerging in China, with SHFE stocks fast becoming depleted and the arbitrage import window opening up. Imports are likely to pick up as a result, tightening the ex-China market, which is already feeling the effects of reduced Iranian supply on account of the countrys currency crisis.
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