Indian Lead Futures Remain Strong, China Demand For Automotive Batteries

Lead futures in London Metal Exchange (LME) and India’s Multi-Commodity Exchange (MCX) continues to trade positive despite an uncertain US economy and eurozone debt crisis due to steady growth in automobile battery demand in Asia Pacific, especially India and China.

On Tuesday lead inventories decreased by 3075 tons to 327950 tons suggesting tightness in the market. LME 3-month chart shows solid support for LME-3 month Lead at $2000 and near term support at $2100 per ton levels, according to Sreekumar Raghavan, Chief Commodity Strategist at Commodity Online. LME-3 month copper last traded at $2148 per ton on Tuesday.

Global market for Automotive Lead Acid Batteries is projected to reach US$43.9 billion by 2018, primarily driven by increase in automotive production, particularly in developing markets such as China and India, growing integration of start-stop technology in new age automobiles, and sustained demand from replacement and after market segments. Increasing adoption of electric vehicles also bodes well for the future of this market, according to a new market research report by Global Industryl Analysts.

At India’s Multi Commodity Exchange (MCX), Lead December futures have gained 1.10% at Rs 119.70 per kg. Technical charts are suggesting the uptrend to continue on strong automotive industry demand. As can be seen from the MCX Chart for December, a rounded bottom has been formed towards middle of October to November but faces resistance at Rs 122/kg levels. Trade volume above 4000 lots and open interest above 2000 lot levels suggest continue bullish trend.

Strong rebound in China industrial output, exports and retail sales have helped base metals complex to regain from lows while rise in US equities and consumer confidence, re-election of Obama are also quite positive for metals market.

By Sreekumar Raghavan