Lead is the London Metal Exchange’s most shorted metal, 5.2% of speculative interest on lead is a short, according to brokers Marex Spectron.
The LME’s three-month lead contract dropped to a seven-month low of $2,241 per tonne on May 3 but has since rebounded to $2,361 per tonne.
Meanwhile, at 19,650 yuan ($3,083) per tonne, the Shanghai Futures Exchange’s most-active lead contract is just shy of a six-month high, coming at a time when warehouse stocks in China tumble to their lowest since October last year. SHFE on-warrant stocks for lead fell to 11,731 tonnes on Friday May 18.
The result has been an import arbitrage opening in China, allowing traders to move ingots into the country at a profit.
The country, which is both the world’s biggest lead producer and consumer, experienced a similar phenomenon last...