Why are Glencore and Hartree cancelling large amounts of LME lead warrants, and what does this indicate about actual physical demand?

Glencore plans to withdraw 30,000 metric tons of lead from LME warehouses, and Hartree Partners has also cancelled lead stocks—though the exact amount is unspecified—after LME lead inventories surged to record highs. Such warrant cancellations create an impression of physical demand, but the metal may simply be shifting between warehouses or traders rather than reaching real end-users; the sources noted Glencore and Hartree may supply the lead to physical customers or move it for lucrative 'rent deals', though two sources said it would be unusual for them to engage in rent deals.

What role does Singapore play in the recent surge of LME lead stocks and warrant cancellations?

All but 1,725 tons of the 65,225 tons of cancelled LME lead warrants are held in Singapore, following Trafigura’s delivery of over 160,000 tons there earlier this month for a rent deal—which pushed LME lead stocks to their highest since 1970. Singapore is attractive for rent deals because the high cost of cancelling warrants, loading out metal, and shipping it to consumers deters withdrawals, allowing warehouses and delivering traders to earn rent—currently 51 cents per ton per day—so storing 30,000 tons there could yield over $5 million annually.

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