What is Lead?
Lead is a soft metal and is bluish-white in colour.
Lead is a metal that is cost effective to produce and has a high economic value in return. As a commodity, its primary production is from mining and secondary production comes from recycled products. Secondary lead production now accounts for more than half of all lead produced. The main producing countries of lead are; Australia, China, Portugal, Mexico, USA and Russia.
Uses of Lead
Lead is popular in many aspects of our everyday life and living conditions. It is used for roof flashings and cladding due to its chemical properties. Lead has significant density which results in an incomparable protection from radiation and is essential to healthcare workers in hospitals, dental surgeries, laboratories and nuclear installations.
Lead usage in battery technology has created significant advancements in various technologies, including storage technologies for renewable energy sources. Renewable energy sources such as solar cell and wind turbines, are now common power sources for cars, trucks, buses, motorbikes, electric vehicles and hybrid vehicles. Lead acid batteries also play a crutial role in back-up emergency power supply in case of mains power failure in hospitals, telephone exchanges, mobile phone networks, public buildings and for the emergency services.
Over the years the less recyclable applications of lead, such as paints and fuel additives have gone, leaving batteries and lead sheet (both eminently recyclable) as the prominent products - between them accounting for almost 90% of all lead used.
Risks of Lead
Like any futures contract, there is always the possibility that the underlying asset i.e. lead will move in the opposite direction to which you anticipate. For example, you take a long position expecting the price of lead to rise and it falls.
With any commodity, supply and demand will affect the price. This risk should be monitored on a regular basis and adjusted to suit your risk parameters.
Mining of metals has an inherent risk with the level of costs associated with extracting the product from the earth. This can include but not limited to the cost of oil to fuel machinery, cost of labour or new tax regulations being implemented.