Oliver Nugent

You've got this big China pull, really extreme China tightness at the moment, but there's a very big quality deferential between the metal that's attracted into China and most of the metal that's left on the LME.

Seeing those stock cancellations reverse is a sign that the pull from China (for metal) seems to be letting up, we're hearing that primary smelters (in China) are increasing utilisation rates and tightness in China is being relieved by whatever slack there is outside in the regional market.

It does seem somewhat artificial, however, since the physical premiums do not suggest that conditions have changed. I suspect the market is getting wind of this, leading to a bit of a reversal today.

Lead's a tight market, and it appears that traders are quite actively shorting the zinc/lead ratio, which has been overstretched for a long time.

There's a lot of speculation in this Shanghai lead rally, a lot of froth coming in to chase this up. My worry is they don't stick around for long.