London (Platts)--21Feb2013/903 am EST/1403 GMT
Lead prices are likely to see a near-term correction after the recent rally as supply tightness starts to ease, Bank of America Merrill Lynch said Thursday in a research note. "Although lead remains one of the metals with the strongest fundamentals, we now see scope for a correction, influenced by developments in the US/China and seasonal factors," the bank said. Despite a recovery in the US automotive sector and tight supplies in the physical market, BofA Merrill Lynch said it expected the immediate lack of supply to start to subside in the coming months. It noted that some of the tightness in the US market was caused by environmental regulations that saw many primary smelters shut down, while a shortage of scrap saw tightness in the secondary market. "The tightness of the US lead market has also been exacerbated by prolonged disruptions at producers in other countries. Most notably perhaps, Peru's 100,000 mt La Oroya primary lead smelter," BofA Merrill Lynch said. But it said that some lead smelters were now looking to restart production, while shipments to the US from other global locations would alleviate some of the tightness. At the beginning of February, Glencore resumed lead output at its lead and zinc smelter in Portovesme, Sardinia and BofA Merrill Lynch said the La Oroya lead smelter has been restarting capacity. In addition, the bank saw scope for some exports of lead units from China in the form of semi-finished products and batteries. "Given a slight normalization of the US market and considering also that China will in all likelihood not be a major importer of refined lead this year, we see scope for a price correction in the coming weeks," the bank said. Three-months lead traded on LMEselect at $2,306/mt at 1103 GMT Thursday.--Greg Smart, greg_smart@platts.com--Edited by Jeremy Lovell, jeremy_lovell@platts.comSimilar stories appear in Metals Daily. http://www.platts.com/Products/metalsdaily