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Lead Tops Metals Declines as Dollar Rallies, Inventories Climb  

SMM Morning Review - 2010/2/4 Aluminum Market

Feb. 3 (Bloomberg) -- Lead prices tumbled the most in two weeks, leading declines in industrial metals, as the dollar rallied and inventories climbed to the highest level since September 2003.
The greenback gained as much as 0.5 percent against a basket of six major currencies, curbing the appeal of commodities as alternative assets. Stockpiles of the metal tallied by the London Metal Exchange more than doubled last year. Lead prices have tumbled 17 percent this year on speculation that demand will ease, especially from China.
&quot;Despite some improvements in the economy, the reality of a restocking phase accelerating demand that some people had been looking for has not yet transpired,&quot; said Mo Ahmadzadeh, the president of metals trading at Mitsui Bussan Commodities Ltd. in New York. &quot;If China is going to slow down a little bit, it will lead people to take some money off the table.&quot;
Lead for delivery in three months dropped $96, or 4.5 percent, to $2,021 a metric ton on the LME. That's the biggest drop since Jan. 20.
Stockpiles monitored by the LME increased 0.2 percent to 157,975 tons, the highest level since Sept. 22, 2003.
Prices have dropped for three straight weeks as China took steps to rein in growth. The Asian nation is the biggest buyer of the metal, which is mostly used in automotive batteries.
Johnson Controls Story 
Johnson Controls Inc., the world's largest producer of car batteries, said it has been selected by Wal-Mart Stores Inc. to be the sole-source provider of the parts. Walmart is the biggest retailer in the world.
&quot;The big news in lead is the Johnson Controls story,&quot; Ahmadzadeh said. &quot;It begs a lot of questions, in terms of the use of recycled lead and the demand for batteries.&quot;
Johnson uses about 1.5 million metric tons of lead a year, according to a company presentation in October. The Milwaukee- based manufacturer said in 2007 that it planned to expand its use of recycled lead, which at the time made up as much as 80 percent of its consumption of the metal.
Battery makers are the biggest users of lead, accounting for more than 70 percent of consumption, according to the International Lead &amp; Zinc Study Group. 
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