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Lead is a soft, dense metal that is bluish-gray in color and has a bright luster when freshly cut. It is the fourth most used metal worldwide, part of the base metal sector, and is generally found in ores with other commodities like 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 latest report on lead, the lead-acid battery market accounted for over 85 percent of American lead consumption in 2018. 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 supply and demand dynamics to navigating the stock market.
Lead metal investing: Supply and demand
As mentioned, most lead 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 2018 global refined lead consumption came in at about 11.73 million tonnes, up slightly from 2017. European demand remained stable last year, 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 — in 2013, secondary lead production accounted for 54 percent of total output, says the International Lead Association. Part of the reason lead is recycled so extensively is that it can be recycled indefinitely without any reduction in quality.
Of course, mined lead is also important, and in that regard China is the biggest global producer of the metal by far. It put out 2.1 million metric tons (MT) of lead in 2018, far ahead of second-place Australia. That said, 2018 production from China’s lead mines was down by 50,000 MT versus 2017.
Lead metal investing: Stocks, futures and ETPs
Investors who are optimistic about lead believe that those supply and demand dynamics could push the metal’s price 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.
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 financial exposure to lead, but this route can be difficult, as lead is generally mined as a by-product of precious metals like 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.
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.