Global: Lead inventories reach record highs as hidden stocks continue to build

• LME lead inventories rise to 13-year high amid subdued demand
  
  
• Unreported stocks exceed 178,000 t, pointing to larger oversupply
  
  

Metal Intelligence Centre: Global lead inventories may have reached record highs as a growing stockpile of hidden metal adds to already elevated London Metal Exchange (LME) warehouse stocks. While reported LME lead inventories climbed to a 13-year high of 314,000 tonnes (t) in May, a further 178,816 t remains in unreported storage, according to LME data.

Three years of surplus drive exchange stocks higher

In recent years, surplus lead has steadily accumulated at the LME's warehouses.Reported stocks of lead, kept at the warehouses of the London Metal Exchange, have expanded by more than nine times over the past three years. However, more importantly, the metals hidden inventory stockpile has increased at an alarming pace.

The fundamental driver is oversupply, caused by poor demand, steady output growth, and the registration of Indian brands for delivery in LME warehouses.

According to the International Lead And Zinc Study Group (ILZSG), refined lead supply exceeded global demand by a total of 198,000 t over the last three years, from 2023 through 2025. Further, the agency reported a surplus of 37,000 t in the first quarter of the current year.

Lead's primary end use is in lead-acid batteries for automobiles, and the sector has faced headwinds. China, the largest automobile market in the world, reported a 4% decline in vehicle sales during January-May this year. This includes a 19% decline in passenger vehicle sales. The US, the second-largest automotive consumer nation, reported a 4% decline in sales over the same period. Falling disposable income, rising vehicle prices (due to tariffs in the US), and increasing demand for public transportation have together contributed to this trend.

On the supply side, lead has remained largely insulated from disruptions that have affected other base metals. Nearly 70% of global output is sourced from recycling discarded car batteries. China and India have a well-established recycling ecosystem.

ILZSG data show that refined lead supply has grown at an average rate of 3.5% over the past 12 months.

Total reported inventories of the metal stored in LME warehouses scaled a 13-year high of 314,000 t last month. However, when considered together with the metal's unreported stocks, total inventories are at a record high.

LME reports show that currently 178,816 t of metal remains unreported.

The COO report shows that 74% of LME's reported inventories consist of Indian brands. In recent years, several Indian recyclers have had their products registered at LME warehouses. This allows them to send surplus metal to Asian warehouses whenever the gap between local and international prices provides an opportunity.

It is only a matter of time before the large stockpile of the metal's hidden inventories appears among reported stocks, making monthly futures expiry, on the third Wednesday of every month, a potential period for such "switching of tags."

Put differently, lead inventories are at an unprecedented level -- while some are visible (or reported), others may become visible in the days and weeks ahead.

Note: This article has been published as part of a content partnership between MIC and BigMint.