Lead Advances, Paring Weekly Loss, on Chinese Economic Data

SINGAPORE, Sept. 11 -- Lead advanced, paring its worst weekly loss since February, on optimism about China's economic strength following better-than-forecast data.

    China's industrial production grew at the fastest pace in a year and fixed asset investment expanded 33.6 percent through August amid an unexpected increase in the country's new lending, according to data from the statistics and customs bureaus, and the People's Bank of China today.

    "These numbers are definitely bullish for the market, as they point to economic recovery and growth," said Pan Jinghua, analyst at Shanghai Jinpeng International Futures Co.

    Lead for delivery in three months gained 0.5 percent to $2,125 a metric ton at 12:46 p.m. in Singapore, reversing an earlier loss of 2.3 percent. The metal tumbled 12 percent yesterday.

    Exports by the world's largest lead producer and consumer rose 3.4 percent in August from the previous month as a 4 trillion yuan ($585 billion) stimulus package, record lending and a rebound in property investment and sales countered a slump in global demand, helping China lead Asia's recovery from the global recession. Premier Wen Jiabao said yesterday that the government "cannot and will not" pull back from stimulus measures.

    Still, the metal has tumbled 7.8 percent this week on concern that supply may outpace demand this year in China, the world's largest producer and consumer of the metal.

    China is estimated to produce 3.14 million tons and consume 2.87 million tons of the metal this year, according to Feng Juncong, an analyst at state-backed researcher Beijing Antaike Information Development Co. The country's lead production expanded to 365,000 in August, from 345,000 tons in July, the statistics bureau said today.

    Bearish Estimates

    "The estimates from Antaike are bearish for a market which was already overextended," Chen Yonglin, an analyst at CITIC Newedge Futures Co., said from Shanghai. "Prices had gone up too much too fast as investors overreacted to the poisoning."

    The medium-term impact of China's crackdown on the lead smelting and refining industry, after thousands of children were poisoned by sub-standard smelters, is expected to be negligible as new smelting capacity comes onstream in the next three to four years that will use more environmentally friendly technologies, Macquarie Group Ltd. analysts said Sept. 1.

    Global lead production was about 4.241 million tons in the first half of this year, in line with metal usage of 4.204 million tons, according to estimates from the International Lead and Zinc Study Group.

    Among other LME-traded metals, copper gained 1.3 percent to $6,377 a ton, aluminum rose 0.5 percent to $1,864 a ton, nickel added 1.8 percent to $17,505 a ton. Tin climbed 1.4 percent to $14,398 a ton and zinc fell 0.2 percent to $1,916 a ton as of 12:55 p.m. in Singapore.

    (Source: Bloomberg)