A shortage of deliverable metal in the mainland market led to a scramble for Western lead and simultaneously opened up an import arbitrage window with the London Metal Exchange (LME).
China’s resurgent import appetite has halted a long-running build in LME inventory.
A redistribution of global lead stocks is clearly underway. The question is whether this is a flash event or the start of a more structural change in east-west trade flows.
Shanghai shorts
China imported just 540 metric tons of lead in the first half of 2024 but volumes leapt to 14,000 tons in July and an unprecedented 53,000 tons in August.
It’s possible that the record inflows in August included some Chinese metal that had been sitting in bonded warehouses and re-directed to the domestic market. That in itself would be a highly unusual phenomenon.
The trigger for the change in Chinese trade flows was a July squeeze on the ShFE…
