Lead is the fourth most used metal worldwide. Part of the
base metal
sector, this commodity is generally found in ores with other industrially important metals such as
copper
,
zinc
and
silver
.
Because of its high resistance to corrosion, lead was once used in plumbing. Today, however, most lead is used to make
lead-acid batteries
— in fact, according to the US Geological Survey’s (USGS)
latest report on lead
, the lead-acid battery market accounted for over 93 percent of US lead consumption in 2019. Lead-acid batteries are primarily used to power vehicles, but they have other uses as well.
Read on for a brief overview of how to get into lead metal investing, from the supply and demand dynamics that determine lead prices to navigating the stock market.
Lead metal investing: Supply and demand
As mentioned, most lead is an industrial metal that is currently consumed by the lead-acid battery industry. These batteries are mainly used to power vehicles, but are also used in emergency systems, computers, forklifts and other equipment. In addition, lead is found in remote-access power systems, load-leveling systems and compounds used in the glass and plastics industries.
The International Lead and Zinc Study Group says that 2019 global refined lead consumption came in at
about 11.86 million tonnes
, down slightly from 2018. European demand has remained stable, while increases in Austria, Italy and Poland balanced reductions in France and the Czech Republic.
In terms of supply, it’s worth noting that lead has one of the highest recycling rates in the world. Secondary lead production accounts for more than half of global total output,
says the International Lead Association
. In Europe more than 60 percent of lead comes from secondary production, while in the US that figure stands at more than 80 percent. Part of the reason lead is recycled so extensively is that it can be recycled indefinitely without any reduction in quality.
When it comes to mine production of lead, China is the
biggest global producer
of the metal by far. It put out 2.1 million tonnes of lead in 2019, far ahead of second-place Australia at 430,000 tonnes. However, Australia leads the world in lead reserves, hosting upwards of 36 million tonnes. In recent years, according to the USGS, significant lead resources have been identified with zinc, silver or copper deposits in various countries around the world—including Australia, China, Mexico and the United States.
Lead metal investing: Stocks, futures and ETPs
Investors who are optimistic about lead believe that those supply and demand dynamics could push lead prices up in the coming years. While lead may be considered higher risk than other commodities, it can still prove to be worth the costs and energy.
Where to start with buying base metal stocks?
INN has all the background information you need. Our free report has all the basics. Start here!
But where is the best place on Wall Street to put your money into lead? Those who want to start investing in the sector have a variety of options.
Adding lead mining stocks to your portfolio is one way to gain investment exposure to lead, but this route can be difficult, as lead is generally mined as a by-product of a
precious metal
such as silver, or fellow base metals copper and zinc. Major miners that produce some lead include BHP (NYSE:
BHP
,ASX:BHP,LSE:BHP) and Teck Resources (TSX:
TECK.B
,NYSE:TECK), though of course there are many other smaller companies that feature lead mines and assets in their portfolio.
Investment exposure to lead can also be obtained by buying futures contracts on the London Metal Exchange. Futures are traded in lot sizes of 25 MT, and their price is quoted in US dollars and cents per MT.
Another option is to invest in exchange-traded products (ETPs) with a focus on lead. A number of broad-based
industrial metals
ETPs offer lead exposure, including the Invesco DB Base Metals ETF (ARCA:
DBB
) and iPath Bloomberg Industrial Metals ETN (ARCA:
JJM
). There is also a pure-play lead ETP available called the iPath Bloomberg Lead ETN (ARCA:
LD
); it is linked to an index that consists of lead futures contracts.
This is an updated version of an article originally published by the Investing News Network in 2008.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.