A return to form for lead?

Lead has quite a past. It was used to build the legendary water systems of ancient Rome (one of the many theories about the decline of Rome is that the middle and upper classes all ended up sick with lead poisoning).

It then became a favourite material for the builders of the cathedrals and castles of Europe and later found its way into glass, paints, pipes, ceramic glazes and bullets.

Finally, in the 20th century, it was the motor car that made the metal: cars are driven by lead acid batteries and, of course, lead has long been added to petrol. However, this illustrious history has done little for lead in recent years. Its toxicity means it has been removed from a variety of products, such as paint, and to a large degree petrol, and few firms have been prepared to invest in mining and smelting it.

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But with the rise of the industrial emerging markets, it looks like lead might be about to move back into the spotlight again. Thanks to a shortage of supply, prices have already climbed from a year low of $470 to over $600 per tonne. Currently, only 4% of the population of China has a car. As that number rises, so will demand for batteries, and hence for lead.

In the shorter term, an unusually cold winter in northern Europe promises to increase the need for replacement car batteries, again pushing up demand for lead: Reuters reports that battery stocks are low and that dealers may find it hard to meet demand in the next few months.

IG Index takes spread bets on the price of lead. See www.igindex.co.uk.