Lead LME price forecasts

In recent years, the use of lead within modern industry has significantly decreased, both due to its high toxicity and its highly polluting nature. The sector that reacted most quickly to the replacement of lead was the construction industry, in response to new restrictive regulations to protect public health.
Nevertheless, nowadays, lead still remains a relatively important element within the industry and proves difficult to replace due to its unique properties, including high density, ductility, and resistance to corrosion. Lead is also easily recyclable and can be used in various applications such as radiation shielding material.
These properties continue to make it a highly demanded product both within the transportation sector and the medical industry.

Below is the historical series of financial prices for lead quoted on the London Metal Exchange (LME).

Historical series of lead prices LME

From the historical series graph, there is a sharp increase in lead prices between 2005 and 2007, during which prices went from an average below $1000 per tonne to over $2500 per tonne. After this sharp growth driven by both excess demand (from emerging countries like China, India, and Brazil) and speculative components, there was a correction that slightly lowered lead prices. This correction was much weaker compared to the previous growth, and since then, lead prices have continued to remain at levels twice as high as those before 2005.

In this article, we will provide price forecasts made by various forecasters, describing the most likely future scenario for financial prices of lead quoted on the London Metal Exchange.

PricePedia Forecast

Within the PricePedia forecast scenario, there is a forecast of LME lead prices for the next two years, updated with information available until March 8, 2024.

PricePedia Forecast of LME lead prices

From our forecast, there is a modest growth in LME lead prices, which will go from an average value of $2084 per tonne, recorded last month, to an average value of $2112 per tonne at the end of the forecast period (February 2026).

To qualify this forecast scenario, it may be useful to compare the forecasts just described with those obtainable from other sources.

Implications from Futures

A first alternative source, which is always useful to compare in terms of forecasts, is that contained within futures contracts. This source allows discovering the price at which sellers are willing to deliver a good at a future date, taking on the responsibility of keeping the product in stock until the agreed-upon date.

Comparison between spot and future prices of LME lead

From the analysis of the comparison between spot and future prices (with delivery in December of the year following the month of observation), a situation of contango emerges, where the future price is higher than the spot price. The differential between the future price and the spot price can reach a maximum level equal to the storage and financial costs that an operator would have to incur if they wanted to anticipate the purchase of material they will need in the future. Higher differentials would trigger arbitrage operations (spot purchases against future sales) that would bring the differential back within the limits represented by storage and financial costs. This means that any future price increases would be anticipated by immediately increasing the spot price.
A contango situation therefore indicates that operators do not expect significant price changes in the near future.

This scenario is consistent with PricePedia's forecast of a slight increase in lead prices.

World Bank Forecasts

The second forecasting source under analysis is that made by the World Bank.
Below is the graphical comparison between the latest forecast made by the World Bank (October 2023) and that made by PricePedia on the future annual average prices of LME lead.

PricePedia and World Bank forecasts on annual prices of LME lead

The PricePedia forecasts of the annual average prices of LME lead for the biennium 2024-2025 are respectively $2060 and $2090 per tonne.
The World Bank forecasts of the annual average prices of LME lead for the biennium 2024-2025 are respectively $2050 and $2100 per tonne.
It can therefore be stated that there is a strong alignment between the PricePedia forecasts and those made by the World Bank, since, for both 2024 and 2025, the forecasts differ by only $10 per tonne.

Consensus Economics Forecasts

A final source of forecasting that is useful to analyze is that of Consensus Economics.
The advantage of this source is that it allows building a forecast interval based on the results of a survey conducted among various forecasters in the commodity sector. Furthermore, by comparing the results of two surveys conducted at different times, it becomes possible to observe the variation in the forecast risk from one survey to another.
The following graph shows the results of two surveys, conducted in October 2023 and February 2024, by 21 forecasters on the prices of lead forecasted for December 2024.

Results of Consensus Economics Surveys

From the results of the forecasting surveys, it emerges that from October 2023 to February 2024, the estimate of the monthly average lead price for December 2024 has decreased from $2107 to $2084 per tonne.
The standard deviation, i.e., the forecast risk, is slightly increased from the October to the February 2024 survey.
The forecast interval remains relatively wide with prices ranging between $1800 and $2400 per tonne.

Despite the uncertainty given by the wide forecast interval, the consensus surveys also align with the estimation results of other forecasting sources. The PricePedia forecast ($2069 per tonne) is, in fact, only $15 per tonne lower than the average forecast of the February 2024 survey for December 2024.

Conclusions

Despite the decline in lead usage due to its high toxicity, lead remains an important element within modern industry.
The consensus surveys conducted by Consensus Economics on lead prices have recorded a wide forecast interval, ranging between $1800-2400 per tonne. However, most forecasters agree on a modest increase in lead prices in the near future. In particular, in the Pricepedia scenario, the lead price is expected to reach a value of $2112 per tonne in February 2026, an increase of 1.34% compared to the price in February 2024.