LME canceled warrants for lead drop 5,600 tons to 58,425 tons

LME canceled warrants for lead drop 5,600 tons to 58,425 tons

The London Metal Exchange (LME) has taken a significant step to manage its inventory levels, with a notable reduction in lead warrants. As of July 2, 2025, the LME canceled warrants for lead, reducing the registered tonnage by 5,600 tons to 58,425 tons [1]. This move comes amidst broader trends of shrinking LME warehousing capacity and geopolitical disruptions affecting metal flows.

The LME's global warehousing capacity has declined by 4.25% over the first half of 2025, reaching its lowest level since the exchange started publishing quarterly updates in 2016 [1]. This reduction is primarily attributed to a fall in exchange inventory, with total stocks, including off-warrant stocks, decreasing by 541,000 metric tons over the period and closing June at a 20-month low of 1.62 million tons [1].

The LME's aluminum stocks, traditionally a significant part of its warehousing business, have also seen substantial changes. While the global production base of 65 million tons is substantial, the exchange's aluminum stocks have fallen from over three million tons in 2021 to just 717,000 tons currently [1]. This reduction is partly due to the April 2024 ban on new deliveries of Russian metal, which has redirected a significant portion of Russian aluminum to the Chinese market [1].

The U.S. tariff hike has further disrupted global metal flows, making it difficult for LME storage to attract metal despite lucrative warehouse deals. For instance, the LME warehouse operator ISTIM UK Ltd. in Port Klang, Malaysia, has reduced its presence from 22 to 13 units over the last twelve months, contributing to a 15% decline in total storage capacity at the port [1].

The LME's zinc stocks have also experienced a sharp decline, with registered tonnage falling by 72% since the start of the year to 65,525 tons [1]. Despite this, time-spreads remain relatively relaxed, suggesting that the market is not overly concerned about the reduced zinc inventory.

The broader impact of geopolitical tensions and sanctions is evident in the LME's storage dynamics. The exchange's storage capacity has fallen by over a quarter since the start of the decade, and it is unlikely to return to the levels seen previously due to ongoing political disruptions [1].

References:
[1] https://www.reuters.com/markets/commodities/lme-storage-capacity-falls-politics-upend-metal-flows-2025-08-27/