Lead demand in Japan is still depressed, but demand from other Asian countries is steady and is expected to grow into 1994, if not dramatically, trade sources said.

Taiwan's economic climate, however, seems to be not as optimistic as it used to be.The London Metal Exchange three-month futures lead price is hovering just above $400 a metric ton, or about 55 cents a pound, recovering from $371 in early October but is still sharply lower than $465 in January.

Lead is among the five commodities in The Journal of Commerce Industrial Price Index's metals grouping. In recent weeks, prices have eroded for most base metals tracked by the inflation-sensitive.

Because of the tightness in raw materials, however, the lead market will balance somewhat in 1994, traders and smelter sources said.

The cheap metal price has led mines to cut back concentrate output, making the supply of concentrate tight all through this year.

Traders in Japan say the three-month lead price will stay within a range of $400 to $450 for a while, and one trader said it will slowly creep up to $500 by summer next year.

However, "exports from the former communist bloc are expected to increase from the current level of 100,000 metric tons and will cap a further price hike," he said.

Even though it is the high season for storage batteries for replacement, business is still very slow. "We need to have a very cold winter to spark consumption," a source at a leading battery maker said. Demand for storage batteries, lead's prime application accounting for more than 60 percent of domestic use, has been affected by weak auto sales.

Domestic car sales in Japan for October dropped 11.3 percent on the year, the seventh straight monthly year-on-year decline, according to the Japan Automobile Dealers Association.

"A decline of 1 million car sales means a fall in lead use by 10,000 metric tons," a major smelter source said.

Negotiations for long-term concentrate purchase and treatment charges start at the beginning of next year, and "we expect severe terms from suppliers," he said.

Treatment charges, the cost that mines pay to smelters for refining metals, are said to be offered spot at around $120 a metric ton. That's not much different from this spring's spot price level but sharply lower than 1993's contract terms of $180 to $200.

The U.S. auto industry is showing signs of recovery, and Europe is expected to follow though it may take a while.

With other Asian countries enjoying steady business, "It looks like Japan is the last to recover," a trader said.

In South Korea, demand for the metal increased very slightly this year but is expected to pick up next year, said a spokesman at Korea Zinc, the only lead smelter in South Korea.

The spokesman said the company estimates 1993 production at 90,000 metric tons, increasing to 110,000 in 1994. For 1993, use of lead in storage batteries is estimated to rise 6 percent from 1992, and in 1994 another 5 percent rise is expected, he said. Taiwan's lead consumption is expected to remain stable or possibly decline in the medium term due to deteriorating economic conditions and increasingly tough environmental regulations, Taipei metal trading sources said.

Many of the more environmentally hazardous production facilities had been moved to mainland China, they said. But there are also many ''underground" factories around the island that have been officially

closed down by the government but continue to operate secretly at night, they said. Spot demand will likely continue to be sluggish in coming months, traders said.

Buyers have begun to discuss long-term contracts for 1994. About 80 percent of Taiwan's annual lead import demand is satisfied through long-term contracts. Spot purchase premiums are $70 to $80 a metric ton, while long-term contract premiums for 1994 are expected to remain stable with 1993 levels at $50 to $60.

Taiwan imports most of its lead from Australia, Canada and China.