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By Brad Zigler

What effect would a hike in China's export tax have on the price of lead?

China, the world's largest exporter of lead, is considering raising its export tax to 15% next year. The hike, say producers, is likely to reduce output and put upward pressure on prices.

If past experience is any guide, however, prices may in fact head southward.

In an effort to cool an overheated economy, the Chinese government slapped a 10% export tax on lead in June, prompting the country's smelters to slow production. Cash lead prices topped out at $3,890 per tonne (2,200 lbs.) in October, largely because of the slowed exports. In total, exports have fallen more than 50% year-to-date.

Lead's price slide continues. Today, spot metal changed hands at $2,911 per tonne at the London Metal Exchange.

Is the Chinese tiger finally turning tail?

That's hard to say. But the Chinese government's own researchers are jawboning the word "surplus" for the first time. Before the effect of a tax hike, China's refined lead production would rise nearly 12% next year, according to bean, er, lead counters. Meanwhile, the country's consumption of refined lead is forecast to rise only 10%, creating an overstock of about 350,000 tonnes.

If you're in a shorting mood, you won't find it easy to make a pure lead play outside of trading the 25-tonne contracts on the London Metal Exchange. Lead is usually mined along with other metals like silver and gold, so mining stocks are subject to a lot of extraneous influences, not the least of which is equity risk.

Exchange-traded notes based upon the Rogers International Commodity (NYSEARCA:RJZ) Index, however, can give you a pretty good dose of, um, lead exposure. RJZ, tracking the metals subset, is about 9.5% LME lead.

Source: China Says: "Don't Get the Lead Out"