* 60,000 tonnes LME lead move to Trafigura sheds in Antwerp
* Stock no longer visible to industry, not registered with LME
* Lead at Glencore’s Dutch sheds swells, industry can’t touch it
By Maytaal Angel
LONDON, Sept 18 (Reuters) - Commodity traders Glencore and Trafigura are keeping most of Europe’s stocks of spare lead out of the market’s reach, pushing up premiums for a metal dogged by global surplus and anaemic demand growth in Europe.
Since mid-May, more than 61,000 tonnes of lead has left London Metal Exchange (LME) monitored warehouses in Italy and Spain. Trade sources said the material has been moved to Antwerp, where Trafigura subsidiary NEMS owns 13 storage facilities.
The metal has yet to reappear on LME data, however, leaving the total stocks on which industrial users can draw as a last resort down at just 39,025 tonnes, versus some 110,000 tonnes this time last year.
The only location in Europe where LME lead stocks have risen since mid-May is Vlissingen, where Glencore’s Pacorini subsidiary owns all but two of the port’s 37 LME-registered warehouses.
Stocks in the port currently stand at around 18,000 tonnes, up from some 12,500 in mid-May.
As far as the market is concerned, however, this metal is out of reach given that warehouses at Vlissingen are backlogged with aluminium, with clients having to wait around a year to get metal out, all the while paying hefty rent to Pacorini.
“It’s hard to get your hands on (lead) at the moment. It’s all quite tight. The problem is Pacorini are bidding for material in Vlissingen, so that’s putting pressure on premiums,” a London-based trader said.
Another trader also based in London said: “You can’t get lead from the LME and producers don’t have much in terms of spot supply. Trafigura say they’re moving lead to service the physical market. I find it hard to believe.”
The warehouse logjam is not just confined to lead, but extends to copper, zinc and aluminium, where stocks in Vlissingen have all jumped since mid-May and are now backlogged.
The LME, the world’s biggest marketplace for industrial metals, has come under criticism for tolerating the backlogs that have built up at some of the warehouses it approves to deliver metal against its contracts.
Critics say the warehouse delays undermine the exchange’s role as a market of last resort, where industrial users should be able to always get hold of the metal they need, as well as distorting market balances and inflating premiums.
There are some locations where no queues exist, such as Antwerp.
But critics question whether banks and trade houses who speculate on price should be allowed to run the warehouses and therefore gain special insight into one of the key drivers of price, namely, LME inventories.
Lead premiums - money paid over the LME cash price to secure physical delivery - are stronger in Europe, rising from some $40 a tonne in mid-May to around $60 at present. This is for ex-works producer lead, picked up from the factory gate.
Although the rise is not huge, it is out of step with physical realities.
Demand for lead, a metal used mostly in car batteries, slowed more than usual in Europe this summer as the continent faced an escalating sovereign debt crisis.
It has improved slightly in September, but not enough to cause a pull on a lead market that faces a global surplus. In other words, the rise in premiums has as much to do with warehouse storage plays as with changes in supply-demand balances..
Glencore and Trafigura both declined to comment, although Charles Bucknall, Managing Director of NEMS, said: “NEMS has increased its current storage capacity in Antwerp because the port has all the advantages of Rotterdam, but with more space available and at competitive prices.”