LEAD is one of the commodities that has been traded through MCX. MCX stands for the Multi Commodity Exchange. MCX is the exchange where you can trade commodities such as gold, silver, nickel and agricultural products like cotton, coffee, turmeric, etc. just like the BSE exchange where stocks of companies are traded. The trading mechanism done through MCX is pretty transparent, and it is disciplined with the regulatory framework
Why Should I Invest in Lead:
Lead is a bright, grey-blue metal that gets smeared easily to a dull grey colour. It has been in use for more than thousands of years as it is easy to get from the ground and also easy to shape and work with. Romans used lead for pipes, drinking vessels and fasteners.
It is soft and malleable, heavy and very shiny when molten. It is additionally corrosion-resistant. Lead is found very rarely in the planet's crust as a metal. Galena is the primary lead ore which is usually found in association with copper, zinc, and silver ores. It is one of the most sustainable and recyclable materials. It can be recycled considerably, without loss of its physical or chemical properties.
Lead is generally used for making batteries, particularly the ones used in automobiles, motorcycles, and electric cars. Lead has an incredible density which provides protection from radiation and is used in laboratories, dental surgeries, hospitals, and nuclear installations.
Lead-acid batteries provide essential back-up emergency power supply during power breakdowns in computer installations, aircraft control towers, banks, telephone exchanges and among others. In earthquake-prone regions, such as Japan and California, to minimize damage during tremors or earthquakes, the buildings are mounted on lead shock absorbers.
The facts of the market call for efficient risk management techniques that are important for associates, such as producers, exporters, marketers, processors, and SMEs. When the future is obscure, modern technologies and strategies, including using market-based risk management financial instruments like 'Lead Futures', offered on the MCX platform can improve efficiencies and consolidate competitiveness through price risk management.
Reasons for trading LEAD:
Lead has the unique characteristic that it can be reused endlessly without the loss of physical or chemical properties. This allows the lead to be recycled in massive amounts. About 60% of the worldwide production of lead originates from recycling activities. Reusing will, therefore, be an essential factor in the supply and consequently, the price discovery of lead.
In contrast to other metal products, lead production requires far less energy and energy costs; hence, it will have a slightly smaller effect on the price discovery of lead as opposed to aluminium and many other metals which need vast amounts of power to produce.
For the past years, demand for lead has been on the rise will likely continue to rise for the forthcoming years. The rate of this rise is, however, slightly decreasing, which may ultimately lead to a stagnation of the demand.
The quantity of lead has been relatively stable over the past few years, although there has been a change in producing places. Some countries have seen a drop in production while others have encountered a rise in production numbers, resulting in a sustained supply of lead.
The demand and supply of lead is, therefore, a somewhat reliable indicator for the price as they have been historically constant and has rarely seen high volatility levels.
Factors Influencing the Market:
Lead prices in India are fixed, and it is based on the rates in the international spot market, and the Indian rupee-US dollar exchange rates.
The metal price can be affected due to economic events such as national industrial growth, recession, and inflation, and the global financial crisis.
Commodity-specific circumstances, such as the construction of new production plants or processes, unexpected mine or factory closures (natural disaster, supply disruption, accident, strike, and so forth), or industry restructuring, affect metal prices.
Its supply is also affected when trade policies set by the government regulate material flow.
Before trading in Lead, it's better to know the Contract Specification of Lead:
The contract starts at 1st of a contract launch month and the last trading day falls on the last day of the calendar of the contract expiry month. If the contract launch date falls on a holiday, then the following day the contract starts. Whereas, if the contract expiry day falls on a holiday, the previous day the contracts expire.
Trading Period: Mondays through Friday
Trading Session: Monday to Friday: 9.00 a.m. to 11.30 p.m. / 11.55 p.m*
Quotation/ Base value: 1 Kg
Price Quote: Ex-Warehouse at Chennai district in Tamil Nadu (excludes only GST).
Maximum Order Size: 100 MT
Tick Size (Minimum Price Movement): 5 Paisa per kg
Daily Price Limits Normally, the base price limit will be 4%. Whenever there is a breach in the base daily price limit, the relaxation will be allowed to 6%.In case, if the 6% base price limit the daily price limit will be relaxed up to 9% after a cooling-off period of 15 minutes.
Maximum Allowable Open Position :
For individual clients: 3,500 MT or 5% of the market-wide open position, whichever is higher for all Lead contracts combined together.
For a member collectively for all clients: 35,000 MT or 20% of the market-wide open position, whichever is higher for all Lead contracts combined together.
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