While the global lead market is well supplied, Shanghai’s stocks have been tightened after the ShFE in April lowered the content of bismuth in lead that can be delivered against its contracts in response to stricter emission standards for Chinese battery makers.
As traders struggled to find material to meet the new requirements, China in July became a net importer after years of being a net exporter and lead prices on ShFE reached a six-year high of 20,050 yuan a metric ton SPBc1 on July 18.
They have since eased to 17,434 yuan.
Lead trading activity also surged, reaching all-time highs of 126,959 lots, or 288,550 metric tons, on Aug. 16.
The short sellers caught in the frenzy were either producers hedging or traders risking bets the market would fall.
As they found themselves forced to deliver against their positions, or pay to roll them forward to buy time, some turned to the London Metal Exchange (LME) for lead, where prices…
