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Lead attracts investors, prices increase 17% since January

Close-up of graphiteLead, the base metal used in battery, is attracting investors as prices have increased 17% since January and the trend is expected to continue even though prices of other Base Metals may fall in the coming weeks after the Chinese New Year holiday ends.

The price has increased to Rs 126 per kg from Rs 107 per kg in January beginning and the open interest has increased as well, indicating that the price is expected to go up further. The open interest in lead on MCX on Wednesday afternoon was 6050, a 30-month high. “This week, we could see some consolidation in base metals as the Chinese market is closed.
However, lead is expected to outperform as there are some strong indicators,” said Ranisha Chainani, senior manager (commodity research) at Edelweiss. The pressure on the US dollar has provided sheen to all base metals. Further, in case of lead, imports by China increased 45% in December 2015 over that in the previous month to 297 tonnes.

The last major spike in price was $1,881 in July last year. On Wednesday, spot price of lead on LME climbed to $1817 201. In India, the recent rally in the MCX-lead futures contract is signalling a breakout of the rangebound movement that has been in place for more than six months since June 5.
The rally in lead can extend to Rs 138 per kg, said Hareesh V, senior analyst at Geofin Comtrade. “The short-term trend for lead is higher. The MCX lead futures contract has broken above an important resistance at Rs 125.

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