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Shanghai's new delivery rules catch up with leading sellers

Four sources with knowledge of the situation said that sellers who hoped to sell battery metal lead at the Shanghai Futures Exchange were forced to look for supplies overseas or to roll forward contracts after a change in specifications.

ShFE declined comment.

Shanghai's lead stocks are tightened despite the fact that the global market for lead is well-supplied. This is because the ShFE, in response to the stricter emission regulations in China battery makers, lowered in April the amount of bismuth allowed in lead.

China became a net consumer of lead in July after being an exporter for years. The price of lead on ShFE hit a six-year record of 20,050 Yuan per metric ton.

Since then, they have risen to 17,434 Yuan.

The trading of lead also reached a record high, with 126,959 tons or 288,550 tonnes, on August 16.

Short sellers were either traders or producers who hedged their bets on the market's fall.

Some people who were forced to sell their lead or roll it forward in order to buy more time turned to the London Metal Exchange for the lower prices. The LME has only risen 0.5% this year compared to the ShFE's 23.9% increase.

Since August 1, lead stocks in LME approved warehouses have decreased by 20%, or 46,100 tonnes. .

The ShFE monitored lead stock in the ShFE warehouses more than doubled, to 57 710 tonnes. .

Unknown because they weren't authorised to talk to the media, one of the sources said it was not enough.

The officials did not give a time frame or full details of the situation, but said that finding the correct lead was difficult. There was also confusion about what the right one was.

Since May, ShFE has rejected several deliveries that did not meet the latest standards for ShFE-deliverable Lead, which state that it must have bismuth content that is 25 parts per million or less (PPM), compared to the 40 PPM standard previously.

Bismuth is commonly found in lead, zinc and silver ore. It can cause kidney failure in human beings.

(source: Reuters)