* Glencore holds majority of LME lead stocks-trading sources
* Glencore may aim to crystallise stocks value ahead of IPO
Melanie Burton and Pratima Desai
LONDON, April 26 (Reuters) - Commodity trader Glencore has moved lead stocks to London Metal Exchange monitored warehouses to make evident the value of the holdings before its flotation, senior metal trading sources said.
LME data shows that one entity controls between 50 and 80 percent of inventories. While the exchange does not release the identity of the holder, traders say it is Glencore.
Market sources say Glencore may be moving metal to LME-monitored warehouses from private storage facilities ahead of its initial public offering (IPO) next month to better value its stocks of metals and improve transparency.
"Glencore may just be putting metal onto warrant...prior to the flotation," a senior metals trader said.
The dominant position had helped to fuel a premium for immediate delivery of the battery material, despite inventories of the metal being at their highest since March 1995, at above 300,000 tonnes, which would normally weigh on the spot price.
Glencore is also moving other metals such as zinc into LME warehouses because it then receives warrants that are financial instruments, which helps monetise the value of those inventories, traders said.
"Glencore have put all the stuff into the warehouse and have held the warrants. I think they get a better accounting treatment for holding metal that is warranted," another senior market source at a ring dealing member of the LME said.
The value of 80 percent of LME lead stocks at current prices of $2,558 a tonne is about $623 million.
"Glencore ... are the dominant long ... You put material into a warehouse, the warrant is issued by the warehouse and the warrant is issued to you as the physical owner of the metal."
The market sources said Glencore was using British bank Barclays as an intermediary.
Glencore, the world's largest diversified commodities trader, and Barclays both declined to comment.
Glencore said on April 14 that it aims to raise up to $12.1 billion in a dual listing in London and Hong Kong to boost its firepower for takeover deals.
Traders said Glencore may be holding the lead ahead of finalising sales to clients, effectively removing the material available to the market.
LEAD STOCKS AT HIGHEST SINCE 1995
Dominant positions -- holding more than half of stocks -- are not against LME rules, but the exchange makes public when one entity hold more than 30 percent of positions. Large holdings of LME stocks can occur unintentionally and are not unusual for large companies with many divisions and clients that delve into metals markets.
Last week one entity was holding between 30 and 40 percent of stocks, which increased to 50-80 percent this week, according to LME data.
The LME also monitors the combined positions of cash contracts and stocks. This fell on Tuesday to between 50 and 80 percent from 80-90 percent last week.
The LME declined to comment on the belief among metals traders that Barclays was managing the dominant position on behalf of Glencore.
"The LME constantly monitors all of its markets and has in place guidelines to deal with any dominant position that can arise."
The LME can force holders of dominant positions to make metal available to other market players by imposing its lending guidelines, which are aimed at ensuring orderly markets.
Under these guidelines, if an LME member or client holds 50 percent or more of the warrants or cash positions, it should be prepared to lend at a premium that is no more than half a percent of the cash price for a day.
Around 22,000 tonnes of lead have been delivered into Malaysia's Port Klang LME warehouse since April 11, which traders said was delivered by Glencore.
Traders earlier this month said some 40,000-50,000 tonnes of metal was en route to the Malaysian port, attracted by high premiums for cash metal. But traders said this material is not available to the market.
The premium or backwardation for lead for delivery tomorrow against the next day stands at around $6 a tonne from a small discount on April 18..
The premium for the cash contract against the benchmark three-month futures is around $34 a tonne from $75 a tonne earlier this month and compared with a discount of around $10 a tonne late in February. (Reporting by Melanie Burton, Pratima Desai, Sue Thomas and Rebekah Curtis; editing by Anthony Barker)