Can the price of lead continue to defy gravity this year?

published 11 September 2007

Lead prices have jumped almost 40% this year to this week's record high of over $2,220 a tonne. And the poisonous metal used mostly in batteries for vehicles, computers and fork-lift trucks and also in the glass and plastics industries looks poised for further gains, says FAZ.net.

The International Lead and Zinc Study Group anticipates a supply deficit of around 50,000 tonnes of refined lead in 2007, marking a fifth successive annual shortfall, while stockpiles tracked by the London Metal Exchange have fallen by 55% over the past year to under 47,000 tonnes, little more than two days' annual consumption, says Reuters.

Asia is the main consumer of lead, with China, as ever, leading the charge amid a rapid rise in demand for vehicles; Chinese demand will rise by 12.4% this year, reckons the IZLSG. Chinese lead exports have fallen as domestic demand has risen, and the recent news that China is to impose a 10% tax on lead exports has raised the prospect of even tighter global supplies. The market is worried that China is trying to throttle its lead exports, says William Adams of Basemetals.com. No wonder, then, that investment bank Calyon now expects lead prices to average $2,000 a tonne in the second quarter of 2007, as opposed to its earlier prediction of $1,300. Investors can spread bet on lead at IG Index.