Reuters Column: Shanghai short squeeze shocks lead market into life
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LONDON, Sept 5 (Reuters) - Lead is not a metal that tends to grab the headlines but the market has just hit a rare pocket of turbulence.
The Shanghai Futures Exchange (ShFE) lead price jumped to a four-year high of 17,540 yuan ($2,402) per metric ton on Monday amid surging volumes and open interest.
This has come as something of a surprise. Lead market dynamics are currently tepid at best due to weakness in the automotive sector, which accounts for around 70% of total demand in the form of lead-acid batteries.
The International Lead and Zinc Study Group estimates global lead usage contracted by 0.9% in the first half of this year, generating a modest 25,000-metric ton supply surplus.
But some of that surplus would be very welcome right now in Shanghai, since the local market is in the grips of a vicious short squeeze.
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