LME lead stocks jump to highest level in 11-1/2 years after inflows
LONDON, Nov 19 (Reuters) -Lead inventories in London Metal Exchange approved warehouses have jumped by 49% over two days to their highest level since March 2013, LME data showed on Tuesday.
Inflows of 91,025 metric tons were likely to be from parties delivering against short or bearish positions ahead of Wednesday's November contract expiry, analysts said. MPBSTX-TOTAL
LME data shows two parties each holding a major short position in November - one accounting for more than 40% of market open interest and another one for 10%-19%. 0#LME-FBR
On the other side of the market are four long positions, where one party holds up to 19% of open interest and the other three 5-9% each.
In some cases if short positions are not settled on expiry by delivering physical material, buying back positions can lead to sharp price rises, especially when there is a shortage of available stocks to the market.
However, after the inflow since last week, LME total lead inventories represent mostly on-warrant stocks, with only 3% of stocks marked for upcoming delivery out. A warrant is a legal document showing ownership of inventories.
The stocks are almost entirely concentrated in Singapore, where the LME registered a new warehouse a week ago in addition to its already-listed operators in the country.
The metal "has been predominantly delivered into Singapore where a new LME warehouse has only been recently registered. Therefore I would think it's most likely finance related," said Alastair Munro at broker Marex.
The discount, or contango, for cash lead against the three-month contract CMPB0-3, was last at $39 on Tuesday, heading for its two-week high, compared to $36 per ton at Monday's market close.
The LME benchmark three-month lead contract CMPB3 was up 0.7% at $2,002.5 per ton on Tuesday.
Reporting by Polina Devitt; additional reporting by Eric Onstad; editing by Alexander Smith
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