DBB: lead is dead weight

With the booming economies in China, India and Brazil base metals have been flying high. Prices have inflated significantly as they are buying up all spare capacity to build. From buildings, to streets and sidewalks they all need the infrastructure to produce like a G7 nation. Nickel, copper, and aluminum have been on fire. They have backed off from their all time highs, but this type of production is like nothing seen in decades. Companies like Rio Tinto are turning down offers from BHP that seems so grossly overvalued it's not even funny. Consolidation is taking place left and right. Most of these countries can produce most of the commodities they need as they haven't used that much. Since they were not industrialized for quite some time a lot of mining didn't occur, but now they have ramped up capacity. The commodities mentioned before are generally referred to with respect to trading, but you don't hear as much about lead. Lead used to be used in just about everything, from water pipes, to pencils, and paint. It was an everyday element. That was until they found out it was toxic and had some very pad interactions with the human body. I will tell you that pencils never wrote so well, and paint never spread better. These findings limited its use. But other countries still use it for many of their products. Just look at the toys that accidentally got to the US, I'm sure there was a mix up as it was probably headed to stores in China. So the commodity is still used in many of the third world countries. Lead's main use is in batteries and with the increase of electronics and vehicles worldwide, we have seen the price go through the roof. Hedge funds had bought large stocks of the metal causing a false tightening of supply, and this pushed the price to an all time high of $3890 a ton in October. Now the credit crunch took some wind out of lead's sail and the price caved. The biggest problem was many of the tons of stored lead were in private facilities so the London Metal Exchange had no way of knowing the exact capacity, but as money tightened it was too hard to store the metal and thus the LME had a better idea of stores. Plus they had to get the metal out of warehouses as prices increased to store it. Before this happened lead doubled and stocks were down to 17 year lows. This correction caused the metal to decrease almost 30 %. The scariest part is it is believed that there is even more inventory not accounted for. This could cause the price of lead to come to a screeching halt. Lead inventories have doubled since the price decrease. All this is with a decline in lead production in China. China produces more lead than anyone in the world. Pollution is being slowed so the lead producers are suffering. Lead's price should have decreased, as there is a new tax on importing the metal to be smelted. This has caused production to fall by over one-tenth and a decrease in exports by almost two thirds. All of this could be because China is using more and not exporting it. They are building more cars and motorcycles. This has caused battery production to increase significantly, and that could be the reason. Not to mention, there has been a slight global slowdown which looks to speed up again soon. But with now transparency as to how much inventory there is I would stay away from this metal.