Lead Rises in London as Investors Take Advantage of Lower Price

By Chanyaporn Chanjaroen

Aug. 27 (Bloomberg) -- Lead rose for the first time in three days on the London Metal Exchange as industry and investors took advantage of recent declines to buy at cheaper prices. Copper and zinc also gained.

Lead, mostly used in car batteries, fell 27 percent this year through yesterday, the worst performer among metals traded on the exchange. The decline to about $1,600 a metric ton attracted buyers, according to Triland Metals Ltd., one of 12 companies trading on the floor of the LME.

``Whenever prices drop towards $1,600 you see buying interest from consumers and funds,'' Michael Khosrowpour, a trader at Triland, said today by phone.

The contract for delivery in three months advanced $70, or 3.8 percent, to $1,925 a ton as of 11:59 a.m. in London. The metal traded at an 18-month low of $1,531 a ton on July 4.

Increased output in China, the world's largest miner and consumer of the metal, contributed to price declines this year. Chinese miners boosted production by 23 percent last month from a year earlier, according to the National Bureau of Statistics.

The dollar's slide today also buoyed LME metals, increasing their appeal as an alternative investment. The LME index tracking six metals closed down 1.4 percent yesterday as the U.S. currency gained to a six-month high against the euro.

LME-tracked lead inventories fell 3,050 tons, or 3.5 percent, to 83,375 tons, according to a daily exchange report, the lowest since June 16. Stocks have more than tripled in the past year. Lead's implied volatility rose to 53.10 last week, the highest in about a year, suggesting wider swings in prices. It was at 52.73 today.

Copper Advances

Copper rose $35, or 0.5 percent, to $7,615 a ton. A deficit of concentrate that's smelted and refined into the metal has supported prices, countering weaker demand for copper, Chilean miner Antofagasta Plc said today in a statement.

Jiangxi Copper Co., the second-biggest smelter in China, said some competitors are losing money and may close because of low processing fees being paid by miners, Chairman Li Yihuang said today at a press conference in Hong Kong.

Among other metals traded on the LME, aluminum added $15 to $2,783 a ton, and nickel advanced $370, or 1.9 percent, to $20,400. Zinc rose $11.50 to $1,800.50 a ton and tin declined $100, or 0.5 percent, to $20,600.

-- With reporting by Xiao Yu in Beijing. Editors: Tony Barrett, M. Shankar

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net