While everyone is debating the future of copper, gold and
silver after the dramatic mid-April sell-off and recent bounce
to the upside, heres an investible metal you seldom hear
Lead the stuff of auto batteries and
bullets is in vogue with the metals analysts, with
a raft of bullish price projections owing to exceptionally
tight supply and healthy auto sales in the U.S. and China.
All of the metals both precious and industrial
are down substantially since the start of 2013, but lead has
been one of the worst performers. As of May 13 the quote on a
three-month futures contract on lead at the London Metal
Exchange was $2,008 a ton, down 13.8 percent year-to-date. And
yet, going into the second half, Bank of America Merrill Lynch
metals strategist Michael Widmer, based in London, believes
that lead has some of the strongest fundamentals among
the base metals.
Widmer is the most bullish, predicting that lead, which has
seasonal demand, will rise to $2,550 a ton during the third
quarter and will drop back to $2,400 a ton during the fourth
quarter. What you find is that normally, there are two
key demand seasons, winter and then summer. It has to do with
very hot and very cold weather, which damages vehicle
batteries, he says, noting that auto batteries account
for about 80 percent of the demand for lead. The post-summer
peak is in September, when battery producers
restock, he said, while, typically, the second quarter is
Widmer is forecasting a full-year average of $2,363 a ton
for 2013, higher than both the commodities research team at
Goldman Sachs and Société
Générales Robin Bhar, the
firms head of metals research in London, with reports
from both projecting $2,300 a ton as their 2013
Générale is in agreement with $2,400 a ton
as a good number for the fourth quarter, but its third quarter
number is lower than BofA Merrills, at $2,250 a ton.
Goldman has a more conservative near-range forecast of $2,150 a
ton over the next three to six months.
There are a number of reasons why the demand for lead is
rising, while growing the supply is problematic.