Tight supply, fund money bolstering lead market

Dec 14, 2009 | 09:07 AM | Anne Riley

The stars are aligning for the lead market, with ongoing supply constraints and buoyed demand positioning the heavy metal for a positive New Year, according to analysts and traders.

Lead, which has seen prices more than double since the beginning of this year, boasts one of the strongest fundamental positions of the entire base metals complex, market sources said, and is set to strengthen as 2010 takes hold.

A tightening supply situation is one key factor providing support to the lead market. A wave of lead smelter shutdowns took place across China over the summer in the wake of heavy metal poisoning, significantly curbing the amount of metal produced in, and therefore exported from, the metals-hungry nation.

"Lead is unlike aluminum in that there isn't plentiful supply. In fact, probably the opposite—there is a much tighter supply-demand balance," Robin Bhar, senior metals analyst at Calyon Credit Agricole CIB, said. "China is playing a key role both in the production and the consumption side. We've already had some scares on the pollution side, and I think the very simple fact is lead is a very dirty metal to produce. Having said that, there's no substitute. We need to produce it."....