The global lead market is showing a challenging paradox for traders. While the overarching narrative is a bearish one, led by an expected redundancy of the traditional lead-acid battery, Lead prices continue to be stable. There is valuable potential in the Lead market, and in this article, we aim to give you the essential knowledge to approach it with confidence.
Trading Lead through Contracts for Difference
Before diving into the specifics of lead, a solid understanding of how CFDs work and how they differ from buying futures contracts is required. These are some of the key features of trading through a CFD:
- A CFD is a cash-settled derivative. This means you never physically buy, sell, or take delivery of any goods. You are speculating on a contract that is made to track the prices of lead futures in major markets. Using a CFD thus allows you to speculate on prices without ever having to worry about rolling over a futures contract or undertaking physical delivery.
- CFDs allow you to use leverage, enabling you to use your capital more effectively. Using leverage wisely allows you to hold multiple positions at a time without tying up all your capital in just one asset. It also allows you to size up positions and potentially make significant profit from intraday swings that would otherwise achieve only a small percentage gain. Leverage is a tool; when used wisely, it can amplify potential returns, but if used without understanding, it can also increase the size of losses.
- Unlike a physical investment, holding a CFD position past the daily market close typically incurs an overnight financing charge (or 'swap fee'). This cost makes holding positions for extended periods less profitable. Therefore, the strategies discussed below are suited more for short to medium-term trades instead of longer-term investments.
Demand Architecture
Automotive
A common misconception among investors and traders is that the rise of Electric Vehicles (EVs) signals an immediate decline in lead demand. In reality, the relationship is a lot more nuanced.
Historically, the main use case for lead was the lead-based battery used for starting, lighting, and ignition in Internal Combustion Engine (ICE) cars. While the green transition is undeniably underway in favor of EVs, there is still a global fleet of 1.4 billion ICE vehicles. The batteries these vehicles contain have a finite lifespan, typically lasting 3-5 years. Because of this, there is still a huge aftermarket, which is extremely likely to stay around for several decades.
Additionally, the rise of EVs doesn't mean that lead is no longer used in batteries. In reality, the majority of the EV fleet in 2025 continues to use lead-acid due to its superior reliability and cost-effectiveness compared to Lithium-ion batteries.
Industrial and Energy Storage Systems
The exponential growth of data centers, driven mostly by the AI and cloud computing boom, requires massive power supply systems to prevent data loss during outages. While Lithium-ion is gaining market share, lead-acid remains the dominant technology here. This market is growing at a Compound Annual Growth Rate (CAGR) of 3% from 2025 to 2034.
Additionally, markets like India and Southeast Asia are using lead-carbon batteries for renewable energy storage. They are cheaper alternatives to Lithium-ion, and in cases where their lower weight and energy density are less important, they are the preferred solution. These markets have a CAGR of 4.4% until 2034.
Substitution Threats
The long-term threat of substitution is very high, as other battery types are trying to capture lead’s market share in the battery market.
Most notably, Lithium-Ion batteries. They offer superior technology but are significantly more expensive than their lead counterparts. The main pro of Lithium-ion is its higher energy density and lighter weight. In applications where weight is paramount, lead has already lost its market share.
Additionally, Sodium-Ion is emerging as a direct threat to lead-acid. Where Lithium is the higher quality but expensive substitute, Sodium acts as a threat due to its very low costs, challenging lead’s main selling point.
Lead Supply Profile
Major Producers
Geographically, supply is heavily concentrated within China, which on its own produces 44% of primary lead. Other big markets include Australia, the US, Mexico, Peru, India, and Russia. Combined, they make up another 37% of global production, each with a relatively equal size in this global market.
This high concentration poses risks regarding operational disruptions. For instance, July 2025 saw mine production decrease by 3.2% month-over-month due to weather events and labor disputes in key regions. Because of this concentration risk, it’s wise to be aware of the very largest mines so you understand which localized weather events are important to monitor:
- Sindesar Khurd, India
- Red Dog, Alaska
- Cannington, Australia
However, lead is rarely the sole target of a mining operation. It is mostly a byproduct of Zinc and Silver mining. Approximately 80-90% of primary lead supply is linked to the economics of Zinc and Silver. This creates a price insensitivity regarding the primary supply.
Miners will target Zinc and Silver deposits regardless of lead prices. To correctly anticipate lead supply, you must look at its peers. When Zinc and Silver prices are high, and demand is expected to increase, lead supply is likely to increase with it. This dynamic explains recent supply dynamics, where 2025 saw an increase in output despite the market already being in a supply surplus.
Primary vs. Secondary Production
There’s a key differentiator in the Lead market. We can define primary production as Lead that is new and extracted from mines. This part of the supply amounted to 4.540 thousand metric tonnes in 2021.
On the other hand, secondary production is classified as all Lead that is recycled, from already existing supply, by melting scraps. This secondary lead supply accounts for over 60% of global production.
This dependence on recycling creates a structural price floor. If lead prices drop too low, secondary production becomes uneconomic and is halted. This reduces global supply significantly, preventing prices from dropping sharply, especially since primary production is price-insensitive.
Environmental Regulation
Regulatory pressures are perhaps the most significant constraint on lead supply. In the U.S. and Europe, air quality standards are tightening. Primary lead production has become so strictly regulated that European and American producers find it difficult to compete with production in countries where these environmental regulations are absent.
Consequently, European and American markets have focused on recycling lead rather than mining it. High-quality recycling maintains the same quality as primary lead, with 35% less energy and 65% fewer greenhouse gas emissions. This leads to a bifurcated market where emerging countries are expected to increase primary output while developed countries focus on secondary supply.
Furthermore, the demand structure for lead is changing through regulation. The EU has proposed a ban on lead in hunting ammunition and fishing weights. This regulation is expected to remove thousands of tonnes of demand. While this is a small percentage of total lead demand, it signals the intent to phase out the metal.
Financial Market Structure
The major benchmark for Lead is the LME. The LME has a unique structure compared to virtually all other futures exchanges. It uses daily prompt structures that allow companies to hedge specific cargo based on the date of delivery.
Additionally, they also have Weekly and Monthly contracts, although the standard contract, with the highest amount of liquidity and volatility, is the 3-month contract.
Macro-Economic Relations
Lead-Zinc Correlation
Historically, lead and zinc have been highly correlated because they are often mined together. As noted earlier, miners rarely dig specifically for lead but extract it as a byproduct of Silver and Zinc mines. Because of this, the supply side of both assets is very similar.
Lead Prices overlaid with Zinc prices
The above chart lets us empirically verify this high correlation between the two assets. In the overwhelming majority of the time, prices move together. However, when prices do decouple, it gives us hints about industrial demand.
If zinc rallies while lead lags, it suggests zinc-specific tightness (e.g., steel demand) rather than broad industrial strength.
Global Manufacturing PMI
PMI stands for Purchasing Managers' Index. It is measured for the majority of countries and shows whether industrial activity within a region is contracting or expanding. S&P Global, responsible for creating this metric, surveys responses from purchasing managers in industrial companies on topics such as new orders, production, employment, and inventories.
Readings above 50 indicate economic expansion, while readings below 50 indicate contraction. We can use this data to gauge general economic health in lead markets. While looking at the global version is useful, we can get more granular data by looking at the PMI of countries where lead demand is concentrated. In this context, the economies to track would be China, the U.S., India, and Germany.
Conclusion
Lead remains an indispensable component of the industrial economy, underpinning critical infrastructure in the automotive, telecommunications, and energy storage sectors. While the overarching narrative suggests a gradual obsolescence of the traditional lead-acid battery in the face of electrification, prices tell a different story.
Lead is characterized by sustained demand, complex recycling incentives, and evolving use cases that defy simplistic bearish theses. Paying attention to the small details is essential when navigating the lead market.
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