Dramatic inflows of lead stock into London Metal Exchange warehouses this week have challenged the market notion of physical tightness following a suspension at Nyrstar's Port Pirie smelter, which has been cited as the key driver of a recent surge in the lead price.
Total LME lead stock soared to 79,050 tonnes as of Wednesday July 31, up 42.5% from Monday's 55,475 tonnes. There were significant deliveries on Tuesday and Wednesday of 12,250 tonnes and 12,500 tonnes respectively. At the beginning of the week, there were only 3,250 tonnes of lead in LME's Kaohsiung warehouses. In less than three days, the level has risen to 17,925 tonnes. Part of the stock there was pulled out earlier from Europe and transferred to Asia by a major Chinese trading house to take advantage of arbitrage opportunities, a well-informed source said. These warrants were later resold and delivered onto LME's Kaohsiung warehouses in Taiwan,...