LME Singapore warehouse sets record lead orders, but high inventory suppresses lead prices, causing a decline instead of an increase
LME lead prices fell due to high inventory levels, despite record lead orders in Singapore failing to boost prices. Global lead inventories are nearing their highest levels in nearly 12 years, with futures prices dropping by about 0.8%. Marex strategists noted that despite record inventories, there has not been a sharp increase in demand. Lead inventories in Singapore surged mainly due to declining demand from the automotive industry, leading to oversupply, while high logistics costs have suppressed metal exports
According to the Zhitong Finance APP, traders are indifferent to the record orders placed on the London Metal Exchange (LME) warehouses located in Singapore, leading to a decline in lead prices. Meanwhile, global inventories remain close to their highest levels in 12 years. Futures prices fell by about 0.8%, erasing previous gains. Earlier, LME announced that 117,550 tons of inventory had been marked as available for immediate delivery, the highest level since 1997. Almost all orders came from Singapore, where inventories have surged to unprecedented levels this year and remain close to historical highs.
Marex strategist Alastair Munro stated in a morning report: "The market has noticed this record inventory cancellation phenomenon, but the reality is that its sheer scale does not indicate a sudden surge in demand."
Singapore holds nearly all of the LME's lead product inventory. This unique situation provides warehouses and traders with the opportunity to earn high rents, as these warehouses and traders can profit from the new owners of the metals. A large order volume does not necessarily mean strong demand.
The significant increase in reserves in this city-state is due to a decline in demand from the automotive industry, leading to a global surplus of the metal, while high logistics and labor costs make it expensive for traders or manufacturers to ship metals out of Singapore
