Risk Warning: Your Capital is at Risk.
If you want to trade lead, this guide explores different ways you can trade lead, including CFDs and futures contracts.
Once you’ve familiarized yourself with why traders may consider trading lead, we’ll show you where to trade lead in with our list of recommended, regulated brokers.
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
Contents
Reasons You Might Trade Lead
Traders may consider trading lead for the following reasons:
- Bet on Automobile Demand
- Inflation and Weak US Dollar Hedge
- Portfolio Diversification
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Bet on Automobile Demand
The automobile market is the most critical industry for lead-acid battery manufacturers.
Trading lead could be a way to bet on surging demand for automobiles in emerging market countries such as China and India.
Similarly, the low-interest-rate environment in the United States and Europe should bode well for the automobile industry. Low rates mean affordable access to credit markets.
Since most buyers finance automobile purchases, rates play an important role in determining demand.
As long as rates remain near historically low levels, demand for cars and the batteries that go in them should remain strong.
Inflation and Weak US Dollar Hedge
Trading lead is a way to bet on a weak US dollar and higher inflation.
Lead is priced in US dollars, so the performance of the American economy can impact its price. The US Federal Reserve Bank has kept interest rates low and the US dollar weak for many years.
US central bankers are likely to continue these policies to support consumer borrowing and spending. These conditions are likely to be very beneficial for lead prices.
A weak dollar could stoke inflation concerns.
There is also a limited supply of lead, and supplies depend heavily on recycling batteries and other items. The price of the commodity would likely benefit from fears of inflation.
Portfolio Diversification
Many traders have the majority of their assets in stocks and bonds.
Commodities like lead and other precious metals provide traders with a way to diversify and reduce the overall risk of their portfolios.
Ways to Trade Lead
Traders have a limited number of easy options for gaining exposure to lead prices:
| Trading Method | Ownership | Management Costs | Security Costs | Expiry Date | Mgmt Cost | Leverage |
|---|---|---|---|---|---|---|
| Bullion | ✅ | ✅ | ✅ | ❌ | ❌ | ❌ |
| CFDs | ❌ | ❌ | ❌ | ❌ | ❌ | ✅ |
| Futures | ❌ | ❌ | ❌ | ✅ | ❌ | ✅ |
| Options | ✅* | ❌ | ❌ | ✅ | ❌ | ✅ |
| ETFs/Mutual Funds | ✅ | ✅ | ✅ | ❌ | ✅ | ❌ |
| Shares | ✅ | ❌ | ❌ | ❌ | ❌ | ❌ |
How to Trade Lead Futures
The London Metals Exchange (LME) trades a contract on ingots of lead that are 99.97% pure. Each contract represents 25 metric tons of lead and is quoted in dollars.
Futures are a derivative instrument through which traders make leveraged bets on commodity prices. If prices decline, traders must deposit additional margin to maintain their positions.
At expiration, the futures contracts are physically settled by delivery.
Trading futures requires a high level of sophistication since factors such as storage costs and interest rates affect pricing.
What Are Lead Options on Futures?
The LME offers an American style options contract on Lead Futures.
Options are also a derivative instrument that employs leverage to trade commodities. As with futures, options have an expiration date.
However, options also have a strike price, which is the price at which the contract is executed at expiration. Options buyers pay a price known as a premium to purchase contracts. Learn more about options in this Options Trading Guide.
An options bet succeeds only if the price of lead futures rises above the strike price by an amount greater than the premium paid for the contract.
Therefore, options traders must be right about the size and timing of the move in lead futures to profit from their trades.
What Are Lead ETFs?
These financial instruments trade as shares on exchanges in the same way that stocks do.
There are currently two exchange-traded funds (ETFs) that trade in lead futures:
| iPath Pure Beta Lead ETN | iPath Dow Jones-AIG Lead ETN |
|---|---|
Shares of Lead Companies
There are no public mining companies that are a pure-play trade in lead.
Most lead production takes place as a byproduct of mining other metals such as zinc or silver.
| Company | Current Price | Description | Exchange |
|---|---|---|---|
Vedanta | Vedanta Resources is a globally diversified natural resources major with interests in Zinc, Lead, Silver, Copper, Iron Ore, Aluminium, Power and Oil & Gas. | London (LSE) | |
SCC | SCC is one of the largest integrated copper producers in the world. They produce copper, molybdenum, zinc, lead, coal and silver. Their mining facilities are located in Peru and Mexico and they conduct exploration activities in those countries and Chile. | New York (NYSE) | |
Glencore | Australian company. A leading integrated commodity producer and marketer. | London (LSE) |
How to Trade Lead CFDs
One way to speculate on lead is through the use of a contract-for-difference (CFD) derivative instrument.
CFDs allow traders to speculate on the price of lead. The value of a CFD is the difference between the price of lead at the time of purchase and its current price. Learn more about CFDs in this CFD Trading Guide.
Some regulated brokers worldwide offer CFDs on lead. Customers deposit funds with the broker, which serve as margin.
The advantage of CFDs is that traders can have exposure to lead prices without having to purchase shares, ETFs, futures, or options.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Where Can I Trade Lead?
If you’re ready to explore regulated brokers that offer various lead instruments, see this list of brokers that operate in :
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Should I Trade Lead?
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Two trends could raise lead prices in the years ahead: Chinese demand and energy prices.
Continued Chinese Demand for Lead
China is the top consumer of lead and is likely to increase its consumption in the years ahead. Industrialization and urban sprawl in China should fuel demand for power and storage devices.
Lead should play an important role in meeting this demand.
How Energy Prices Impact Lead
Primary lead production requires large amounts of energy.
Blast furnaces require coal and electricity. Mining facilities demand electricity and crude oil to operate. As the world consumes more energy, prices should rise in the coming decades.
These rising costs should make lead more expensive.
Risks of Trading Lead
Traders should also consider the potential risks of trading lead, like:
- A global spike in interest rates or a global recession could depress automobile and battery demand.
- Increased concerns about the health effects of lead exposure could dampen demand for the commodity and hasten the development of alternative technologies.
- Global economic or political turmoil could strengthen the US dollar and weaken the demand for commodities.
Further Reading
You can find more about lead as a commodity in our Lead Commodity Guide. Our team also created a guide on precious metals.
You may find the following metal commodity guides insightful:
- Ways to trade copper
- How to trade gold
- What makes platinum valuable and how is it traded?
- Why do traders trade zinc?
