(Updates with closing prices, adds price poll)
By Peter Hobson
LONDON, July 30 (Reuters) - Lead prices fell on Tuesday after large deliveries of metal into London Metal Exchange (LME) warehouses eased supply concerns and poor economic data pointed to weakening demand.
Benchmark lead on the LME closed 2.4% down at $1,998 a tonne.
The metal used in batteries had rallied nearly 20% from early May to a high of $2,117 last week as smelter outages in Australia and China curtailed production.
But lacklustre projected demand from China, the biggest consumer of metals, was undermining prices, said Macquarie analyst Vivienne Lloyd.
Lead is likely to fall to about $1,900 by the end of the year despite a small deficit in the market, she said, adding that other base metals would also slip unless China was able to step up stimulus spending.
LEAD STOCKS: Lead inventories in LME-registered warehouses rose by 11,850 tonnes to 67,325 tonnes but remain near their lowest in a decade. MPBSTX-TOTAL
LEAD SPREAD: In a signal that nearby supply is not too tight, cash lead moved back to a discount against three-month metal on the LME. CMPB0-3
KOREA: Month-long planned maintenance is being carried out at Korea Zinc’s 500,000 tonne Onsan lead refinery, a source at the company said on Tuesday.
POLL: Analysts polled by Reuters see cash lead averaging $1,947 this year and $1,925 in 2020. They also marked down this year’s forecasts for copper and other industrial metals.
FACTORIES: Underlining the weak demand outlook, a Reuters poll showed factory activity in China is expected to have contracted for the third month in a row in July.
The data will add to a slew of weak manufacturing readings in Europe, the United States and Japan, where output tumbled the most in nearly 1-1/2-years in June, data showed on Tuesday.
GERMANY: Consumer morale worsened in Germany for the third month in a row, a survey showed.
TRADE WAR: Contributing to the slowdown in economic activity is a U.S.-China trade war that shows no sign of ending as negotiators shift to Shanghai this week for their first in-person talks since a G20 truce last month.
FED: Investors were looking to the U.S. Federal Reserve, which is expected to lower borrowing costs this week for the first time in more than a decade.
Lower interest rates should support commodities prices by encouraging economic growth and weakening the dollar, which has strengthened sharply in recent weeks to make metals more expensive for buyers with other currencies.
JAPAN: The Bank of Japan held off from expanding stimulus on Tuesday but committed to doing so “without hesitation” if a global slowdown jeopardises the country’s economic recovery.
OTHER METALS: LME copper closed 1.2% down at $5,947.50 a tonne, aluminium fell 0.4% to $1,803, zinc slipped 0.4% to $2,460, tin lost 0.9% to $17,450 and nickel finished unchanged at $14,360.
Reporting by Peter Hobson; Additional reporting by Mai Nguyen and Tom Daly; Editing by Louise Heavens and David Goodman