London 23/09/2016 - Large deliveries of lead are set to be made to listed LME warehouses in Europe and Asia sheds next week while large-scale warranting and rewarranting takes place in these regions - believed to be orchestrated by Trafigura, FastMarkets understands.
Three-month lead has fallen $8.50 per tonne from last night's close to $1,938 per tonne, bucking the positive trend across the other base metals.
Four well-placed sources confirmed to FastMarkets that one player is warranting and rewarranting of at least 20,000 tonnes of lead in in Spain, elsewhere in Europe and also in Asia.
"It will be an important one - the majority of Spanish stocks and important amounts in Europe," one source said.
Three of those sources named Trafigura as that one player. Trafigura declined to comment on the deliveries when contacted on Friday by FastMarkets.
"They have a lot of off-warrant material and they are rewarranting most of what they have in Spain," a second source claimed. "People are getting wind of this and going short in the market."
Forward spreads for lead are in a tight $2.4 contango for cash-October while cash-November is in a $0.75 backwardation, making large stocks of lead expensive to finance.
As well, physical demand for lead is weak - warrants for 99.97-percent-purity lead in Spain are trading at a premium of $15-20 per tonne.
(Additional reporting by Perrine Faye, editing by Mark Shaw)