By Pratima Desai

LONDON (Reuters) – Significant amounts of lead have been deposited in London Metal Exchange (LME) approved warehouses by Citigroup for so-called rent-sharing deals over the past few days, three sources accustomed to the matter said.

Rent deals are profitable agreements under which LME-registered warehouses share fees or rental income with firms that deliver metal to them.

It shouldn’t be known exactly how much lead Citi delivered to LME warehouses. But LME data shows stocks of the battery material in Singapore jumped 15% or 27,250 metric tons within the 4 days to March 18 to 206,350 tons.

Citi declined to comment.

Much of the lead in warehouses in Singapore, amounting to 90% of the overall within the LME’s network world wide, is under rent deals, the sources said.

Firms that deliver metal for rent deals shouldn’t have to retain ownership of the metal, but they get a share of the rent, paid by the brand new owners, for so long as the metal stays in that warehouse.

Rent for metal on LME warrant, a title document conferring ownership, is significantly higher than for metal in warehouses that shouldn’t be on warrant.

LME warehouse each day rent for lead in Singapore is 51 U.S. cents a ton, which for 27,250 tons would amount to just about $14,000 a day.

These deals are possible because firms are capable of buy cheaper nearby lead contracts and sell higher priced contracts further along the maturity curve.

Specifically, the discount for the money against the three-month lead contract rose above $40 a ton in February.

A part of the rationale for the discount is surpluses, which analysts at Macquarie estimate at 76,000 tons this 12 months, up from 55,000 tons in 2024.

(Reporting by Pratima Desai; editing by Kirsten Donovan)