On the stock point of view it is estimated that there is plenty of lead around to absorb any short-term demand boost. LME stocks of the heavy metal touched a multi-year high of 297,500 tonnes in early February as metal was sucked into the system in response to cash-date tightness. Arrivals in the LME warehouse system totaled 98,300 tonnes in the first six weeks of the year as short position holders elected to deliver metal against their February positions.

With the passage of the February and in third week of February the tightness dissipated and the warranting activity lost momentum. Indeed, the stocks pendulum swung the other way almost immediately with the cancellation of 16,200 tonnes on Feb 15, since when metal has been departing the system at a steady rate and the headline figure has eased to 289,500 tonnes.

Lead has been seeping out of a range of locations in all three regions, suggesting the tail effects of the Northern Hemisphere winter replacement battery season. However, the stand-out location is Antwerp in Belgium, where 14,675 tonnes of lead were cancelled on Feb. 15 and metal has been leaving every day since the start of March. Meanwhile according to the International Lead and Zinc Study Group (ILZSG) estimates that lead supply outstripped demand by a fairly marginal 48,000 tonnes last year. The World Bureau of Metal Statistics estimates there wasn't a surplus at all but rather a deficit of 18,000 tonnes. Since LME stocks rose by 61,775 tonnes over the course of 2010, the inference must be that what arrived in January was coming not from new surplus but from legacy off market stocks.

Moreover, while the starting point may differ statistically, it doesn't negate a consensus view that the global refined market will tighten further this year, largely on the back of emerging world demand for automotive and e-bike batteries. Throw in the extra demand boost now seen emanating from the industrial battery sector in Japan and the stage seems set for further hits on LME stocks and, quite possibly, a repeat of the severe cash-date tightness that characterized the early part of this year.