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Hedge fund Squarepoint plans to take more than 40,000 metric tons of lead from London Metal Exchange warehouses to deposit elsewhere in the system for a lucrative rent deal, three sources with knowledge of the matter said.

Rent deals are arrangements under which LME-registered warehouses share storage income with traders that deliver metal to them.

While large withdrawals from LME warehouses can indicate strong physical demand, in this case the metal will stay within the exchange warehouse system. Such transfers can make it harder to gauge underlying supply and demand in a market that relies heavily on LME inventory data.

LME data shows cancelled lead stocks in Singapore, or metal earmarked for delivery, jumped 41,525 tons on October 21, taking the total to 71,450 tons , more than 20% of lead stocks in the LME system.