By Glenys Sim
Sept. 11 (Bloomberg) -- Lead slumped for a third day, heading for the worst week since February, on concern that supply may outpace demand this year in China, the world’s largest producer and consumer of the metal.
China is estimated to produce 3.14 million tons and consume 2.87 million tons of the metal this year, according to Feng Juncong, an analyst at state-backed researcher Beijing Antaike Information Development Co. The metal has more than doubled this year, and surged 12 percent last month on speculation that China’s crackdown on lead smelters after thousands of children were poisoned would cut production.
“The estimates from Antaike are bearish for a market which was already overextended,” Chen Yonglin, an analyst at CITIC Newedge Futures Co., said from Shanghai. “Prices had gone up too much too fast as investors overreacted to the poisoning.”
Lead for delivery in three months fell as much as 2.3 percent to $2,067 a ton and traded at $2,090 a ton at 1:51 p.m. in Singapore. The metal, which plunged 12 percent yesterday, has tumbled 9.2 percent this week.
“The speculative bubble in lead has finally burst as investors turn their attention to the fundamentals,” Zhu Bin, president of futures research at Nanhua Futures Co., said from Hangzhou.
The medium-term impact of China’s crackdown on the lead smelting and refining industry is expected to be negligible as new smelting capacity comes onstream in the next three to four years that will use more environmentally friendly technologies, Macquarie Group Ltd. analysts said Sept. 1.
China’s lead production expanded to 365,000 tons in August, from 345,000 tons in July, according to official data today. Global lead production was about 4.241 million tons in the first half of this year, in line with metal usage of 4.204 million tons, according to estimates from the International Lead and Zinc Study Group.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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