i thought it might be abrading as well. Then you might get enough localized heating to get melting. Hard to see the mechanism otherwise. Maybe a piece of heat shrink at the head tube
If there is going to be abrasion, the head tube is the place.

I had to go into my tail light to remove the connection to ground. You can check with a voltmeter between the negative connection to see if it goes to the attachment bolt. Or any place on the frame if that's more convenient