SHFE Mulls Revision of Lead Delivery Rules

SHANGHAI, Aug. 14 (SMM) – The Shanghai Futures Exchange (SHFE) is to consider revising rules for lead delivery with three proposals under discussion, SMM learns.

SHFE’s approved warehouses for lead delivery are mainly located in Guangdong, Zhejiang, Jiangsu, Shanghai and Tianjin. However, stocks in Guangdong’s warehouses often pile up due to a lack of lead consuming enterprises nearby. In Jiangsu, Zhejiang and Shanghai, however, lead-acid battery makers rarely source goods from warehouses due to limited stocks there.

The proposal to establish warehouses for lead delivery in Hubei and Hunan gains most support, as lead smelters cluster in Hunan, Henan, and Jiangxi. Besides, a large number of lead-acid battery producers are situated in Henan, Anhui, Hubei, and Jiangxi. All these provinces are in central China, allowing easy transportation and storage.

Some downstream producers in Zhejiang and Jiangsu favor a plan to set a 120-150-yuan-per-tonne discount for goods delivered to Guangdong’s warehouses, so as to bring down the sizable stocks in Guangdong and encourage smelters to ship goods to Shanghai and Zhejiang. Nevertheless, smelters expressed objection to the proposal as it may hurt their profitability.

Another suggestion is to set new pricing policy for physical goods, but the long-established pricing system now used by market players makes it less feasible.