Aug 22 (Reuters) - Shanghai Futures Exchange (SHFE) lead prices leapt to a more than 17-month high on Tuesday on fears that there would not be enough metal to cover the short positions expiring next month.
The most-traded September lead contract on SHFE jumped as much as 1% to 16,280 yuan ($2,235.50) per metric ton, a level unseen since March 2022.
Thousands of tons of lead sold on the SHFE for delivery next month are expected to trigger a price surge as the current SHFE inventory is not enough to cover them and the physical market is tight.
Three-month lead on the London Metal Exchange (LME) rose 0.2% to $2,170 a ton at 0633 GMT.
"It sounds like the beginning of a classic short squeeze," said a trader.
"There's a lot of SHFE registered lead sitting in Taiwan LME warehouses right now. In the event of a short squeeze, one can (in theory) use LME lead in Taiwan to deliver into SHFE," said the trader.
Lead inventory in Taiwan of 31,475 tons accounts for 56% of total LME stockpiles of the metal, exchange data showed.
But on the LME, a party holding 50%-80% of warrants raised near-term supply concerns and flipped the cash-three month spread to a premium of $17.50 a ton, from a discount that lasted for a month until Aug. 15. <0#LME-WHL>
LME copper rose 0.8% to $8,338 a ton, aluminium advanced 1.1% to $2,168, nickel climbed 2.1% to $20,545, zinc increased 1% to $2,341.50, while tin rose 1.2% at $26,020.
SHFE copper rose 0.5% to 68,790 yuan a ton, aluminium advanced 1.5% to 18,725 yuan, nickel leaped 1.4% to 169,320 yuan, zinc was up 1.1% at 20,155 yuan, and tin jumped 2.7% to 219,520 yuan.
A softer dollar index made greenback-priced metals cheaper to holders of other currencies.
For top stories in metals and other news, click or ($1 = 7.2825 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Rashmi Aich and Sohini Goswami)
