Lead Rises Close to Record as Stockpiles Dwindle; Copper Gains
By Chanyaporn Chanjaroen
Sept. 24 (Bloomberg) -- Lead rose close to a record in London as stockpiles reached a 17-year low. Copper and nickel also advanced.
Inventories of lead tracked by the London Metal Exchange dropped 150 metric tons, or 0.7 percent, to 21,050 tons, the lowest since March 16, 1990. Car-battery producers, the largest users of the metal, are stocking up before the peak demand season in winter, when cars are more likely to need replacements.
``Lead supply and demand fundamentals are very strong,'' Gayle Berry, a metals analyst at Barclays Capital in London, said today by phone. Barclays is among 12 companies that trade on the LME floor. The metal for immediate delivery will rise to $3,600 a ton in one month, according to the bank's forecast.
Lead for delivery in three months rose $111 a ton, or 3.3 percent, to $3,470 a ton as of 4:42 p.m. local time, after earlier trading at $3,495 a ton. The contract climbed to a record $3,500 a ton July 23. The contract for immediate delivery closed at $3,434 a ton on Sept. 21.
The metal has more than doubled this year, posting the largest gain among all LME-traded metals, after Ivernia Inc., which produces about 3 percent of world mine output, stopped exports from its Magellan mine in Australia because of an investigation into lead poisoning. Ivernia's shipments through the port of Esperance were suspended March 12 after high lead levels were found in some residents' blood.
Demand beat supply by 27,000 tons in the first seven months, according to the International Lead and Zinc Study Group.
One company held between 50 percent and 79 percent of LME deliverable stockpiles as of Sept. 20. That excludes stockpiles that have already been earmarked for delivery.
Short Position
One company had more than 90 percent of warrants, or documents showing ownership of LME metal stockpiles, of lead for next-day delivery as of Sept. 20. That means anyone with a so- called short position expiring today would have to borrow from that company and pay a charge. A short position is a bet that prices will fall.
The next-day borrowing cost of lead jumped to $20 a ton on Sept. 21, the highest this year, and traded at $2.50 today. Lead for immediate delivery traded $75 a ton above the benchmark three-month contract. Contracts for later delivery are normally more expensive because of insurance and storage costs.
LME-monitored lead stockpiles in Singapore, the nearest location to China where most consumers are, are at 975 tons, 97 percent less than at the start of the year. About 90 percent of all lead stockpiles are in the U.S., the world's second-largest consumer.
Lead exports from China, the world's largest producer of the metal, slumped to 10,330 tons in August, 73 percent less than a year earlier, China's customs office said today. In the first eight months, they declined 51 percent.
CMR Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Not Held
