LME Singapore warehouse records high lead orders, but high inventory suppresses lead prices from rising, instead causing them to fall.

Traders were unimpressed with the record orders placed by the London Metal Exchange (LME) warehouses in Singapore, leading to a fall in lead prices. Global inventories remain close to the highest levels in 12 years. Futures prices dropped by about 0.8%, erasing previous gains. Earlier, LME data showed that 117,550 tons of inventory had been marked for immediate delivery, the highest level since 1997. Almost all orders came from Singapore, where inventory levels have rapidly increased to unprecedented levels this year, still close to historical highs. Marex strategist Alastair Munro stated in a morning report, "The market has taken note of this record inventory cancellation phenomenon, but the sheer scale does not necessarily indicate a sudden surge in demand." Singapore holds almost all lead commodity stocks of LME. This unique situation provides warehouses and traders with the opportunity to earn high rents, as they can profit from the new owners of the metal. Large order volumes do not necessarily imply strong demand. The significant increase in reserves in this city-state is a result of a decrease in demand from the automotive industry globally, leading to an oversupply of the metal. The high costs of logistics and labor make it expensive for traders or manufacturers to move metal out of Singapore.