Lead is a soft, malleable metal that has been in use for thousands of years. It has a low melting point, is very dense and is highly resistant to corrosion. It is a blue-gray in colour, and has many practical applications in wide variety of settings.
Lead has a strong pedigree as a commodity, as it has been in use for at least 5000 years. Its original use was primarily for building materials and piping, and this is particularly apparent in old European churches and other grand buildings. It can also be seen to be used in a decorative capacity, both on a small-scale, as in the case of ceramic bowls, and a much larger scale, as in the case of ornate window displays in the old cathedrals. Although it is used much less frequently for these purposes in the present day, it enjoys popularity in other applications, and one of the main appealing features of lead futures trading is that its production for domestic use is limited to a very select few producers. This can potentially be a great window of opportunity for traders in the lead commodity, meaning it is still one of the most highly traded metal commodities.
Lead futures are traded on the London Metal Exchange (LME), with the Shanghai Futures Exchange (SHFE) expected to begin trading lead futures in the near future. LME Lead futures are traded using the contract code PB. While the main consumer market for lead in the past was the domestic market, the demand for lead has now shifted to the industrial sector. This shift has mainly been due to environmental concerns, as lead is considered to be a toxic substance. Paints that contained lead have come under fire, as has the use of lead solder in drinking water systems. Despite this however, lead has not fallen out of favour as a commodity as it is now the used extensively in SLI batteries. Indeed it is believed that almost 90% of the lead consumed in the US is in the production of SLI batteries. Lead is popular as a material for use in utility vehicles such as fork lift trucks and airport logistics vehicles. It is also widely used in uninterruptible power systems such as the ones used in hospitals. The leading producers of lead are Australia and China, where most of the reserves of lead ore are located.
There are many factors that influence the prices of lead that is traded at the LME. LME lead prices can be affected by the number of vehicles in use that require lead batteries. Lead batteries have a comparatively short lifespan and need frequent replacement, so the demand for lead can vary depending on the number of vehicles in operation that require these batteries. Furthermore, the perceived toxicity of lead with regard to the environment will likely always be something that will affect lead market prices. The lead commodity may be replaced at some point by cleaner alternatives, such as lithium for use in batteries, which will reduce demand considerably and consequently drive down the LME lead price.
Ready to Start Trading Lead?
Important: Your capital is at risk. CFD services are suitable for experienced traders only.