Will There Be Enough Lead for All Those New Cars and Trucks?
CSM Worldwide predicts world vehicle production rising to 63.6 million units in 2010 and increasing steadily to 85.4 million units in 2015. Assuming CSM’s global auto production forecast is correct, all automobiles produced are cars and all cars produced use lead batteries, each with the average 10.1 kilograms of lead, the world would need at least 642,360 tons of lead in 2010. If all the automobiles produced were trucks instead, with each battery using the 16.1 kilograms of lead (the average per truck, according to Battery Council International), then the world would need 1,023,960 tons of lead in 2010. Production of lead in 2009 equaled 8,827,000 tons, and 2010 production will likely rise above that level due to mine and smelter restarts and capacity expansions. World mine output grew in both 2008 and 2009, despite a global recession and financial crisis. So yes, Virginia, there will be enough lead for all those new cars and trucks.
But what about OLD cars and trucks? Only in the event that each of the estimated 800 million cars and trucks in the world needed a replacement battery in 2010, which would add 8,080,000-12,880,000 tons of demand, would the world lack enough lead. As the average battery life is four years for cars and three years for trucks, it is more likely that only 25% of cars and 33% of trucks will need their batteries replaced in 2010. That brings total replacement demand down to 2,020,000 tons of lead for cars and 4,289,040 tons of lead for trucks, for a total of 6,309,040 tons of lead. Adding demand from new cars and trucks, world battery use will demand 6,951,400-7,333,000 tons of lead—79%-83% of 2009 production. Non-battery uses of lead—which typically consume around 20% of all lead produced—will have just enough supply for their needs.
Global lead reserves are adequate. The U.S. Geological Survey estimates the world lead reserve base at 170 million tons, equivalent to 24-52 years of supply, with 79 million tons currently economically feasible to recover. However, not all of this needs to be extracted right away to meet demand because recycling offsets the need for new lead supplies. Since the 1970s, the bulk of global lead supplies have come from recycling, or secondary production, rather than mining. In 2009, 54% of lead produced came from recycling.
Recycling will alleviate lead shortages. The U.S. recycles 96% of its lead batteries, according to 2004-08 statistics released in August 2009 by Battery Council International. Because Americans own the most automobiles in the world, they also have the largest potential scrap supply. According to data from the International Trade Centre, the U.S. exports more scrap lead than any other country by both value (25.6% of world exports in 2008) and volume (140,364 tons in 2009).
This is an excerpt from RGE’s outlook for lead. Check out Will Lead Take the Lead Among Base Metals? for the future of lead prices, supply and demand.
All rights reserved, Roubini Global Economics, LLC. Opinions expressed on RGE EconoMonitors are those of individual analysts and may or may not express RGE’s own consensus view. RGE is not a certified investment advisory service and aims to create an intellectual framework for informed financial decisions by its clients.
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