By Anna Stablum March 26 (Bloomberg) -- Lead futures outstanding, or open interest, rose to a 15-month high on the London Metal Exchange, suggesting investors may expect prices to extend their worst start to a year since at least 1987. The metal for delivery in three months fell 13 percent this year on the LME as open interest advanced 23 percent to 122,920 contracts, the most since December 2008, bourse data show. Rising open interest combined with declining prices suggests new short positions, or bets on lower prices, being taken, said Dan Smith, an analyst at Standard Chartered Plc in London. “Lead, as we go into the second quarter, is at its seasonally weakest,” said Robin Bhar, an analyst at Credit Agricole CIB in London. Demand is generally higher the rest of the year because more extreme temperatures in the northern hemisphere make it more likely batteries will fail, he said. Stockpiles in warehouses monitored by the LME have almost tripled in a year as output surpassed demand, reaching their highest since July 2003. Lead production outpaced demand by more than 200,000 tons last year and the surplus is expected to be at least as high this year, according to Brook Hunt, a Wood Mackenzie company. Lead will average $2,198 a ton in the second quarter, falling to $2,100 in the third before advancing to $2,177 in the following three months, according to the median estimates of as many as 11 analysts surveyed by Bloomberg. The metal closed at $2,077 yesterday on the LME. Batteries account for 80 percent of global lead demand, according to Bank of America Merrill Lynch. --Editors: Stuart Wallace, Alastair Reed To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net. To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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