Bob J
NES Member
Time to stock up on bullets......![[smile]](/xen/styles/default/xenforo/smilies.vb/001.gif "Smile [smile]")
http://online.wsj.com/article/SB125132910522062107.html#mod=todays_us_money_and_investing
http://online.wsj.com/article/SB125132910522062107.html#mod=todays_us_money_and_investing
By MATTHEW WALLS
LONDON -- Lead prices rose, continuing a rally this week due to the threat of widespread closures at Chinese smelters after reports of lead poisonings there.
Prices likely are to stay supported at the higher levels until Chinese government authorities announce how they will respond to lead-poisoning cases, analysts said.
Lead for delivery in three months closed up $61, to $2,086 a metric ton, on the London Metal Exchange. After touching a one-year high Wednesday, prices fell back amid a commodities selloff and a stronger dollar. The PM kerb price -- a level used by clearinghouses to determine margin requirements -- was down $10 to $2,050 a metric ton.
Lead has rallied 12% since Monday after news reports suggested that if Chinese smelters were to close it could potentially affect a total of 400,000 metric tons of annualized capacity.
China produces a third of the world's lead, and inventories on the exchange remain relatively low at less than five days of annual world consumption.
"As long as this goes on, the surplus will go down and we could indeed shift into a deficit," said RBS Global Banking and Markets commodity analyst Stephen Briggs.
About 80% of lead is used in automotive and industrial batteries. Unlike most other metals, about 50% of annual lead supply comes from recycling of lead-acid batteries.
Worries of shutdowns began to spread after villagers stormed a lead smelter in Shaanxi province to protest lead poisoning of children, and a second case of lead poisoning emerged at a manganese smelter in the central province of Hunan.
It remains unclear on how much capacity has been shuttered, with agencies reporting widely different estimates. That uncertainty should underpin prices, analysts said.
If Chinese authorities do close 300,000 tons or more of capacity as they investigate whether smelters meet government environmental standards, the loss of output could tighten the market, analysts said.
"It's a massive threat," said David Thurtell, an analyst at Citigroup in London. "We can go a lot higher," adding a rally above $3,000 a ton is possible.
Two factors that could restrain a rally are large unreported inventories of lead believed to have been stockpiled in China this year and sluggish demand outside of China.
But evidence of the purported lead stockpiled in China is only anecdotal, and that uncertainty may keep the market sensitive to supply shortages, analysts said.
In other commodity markets:
CRUDE OIL: Prices ended lower following a government report showing a slight increase in crude-oil inventories last week. Stockpiles are about 15% higher than they were this time last year, while demand is weaker. Light, sweet crude oil for October delivery settled 62 cents lower, or 0.9%, at $71.43 a barrel on the New York Mercantile Exchange.
NATURAL GAS: Prices edged up on bargain buying, despite high levels of gas in storage and weak demand, with market participants trying to gauge whether gas prices have reached a floor. Nymex gas for September delivery settled 2.8 cents higher, or 1%, at $2.910 a million British thermal units.
Write to Matthew Walls at [email protected]
![[rolleyes]](/xen/styles/default/xenforo/smilies.vb/042.gif "Roll Eyes [rolleyes]")
