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Al stocks jump more than 65,000 tonnes on nearby backwardation

May 16, 2011 - 11:05 GMT Location: London

KEYWORDS: aluminium , warehouse , Detroit , Singapore , backwardation , LME , Jethro Wookey

Aluminium stocks climbed by more than 65,000 tonnes in London Metal Exchange-listed warehouses on Monday, after nearly 55,000 tonnes were delivered into Detroit locations.

The stock build was mostly the result of off-warrant material already in Detroit being put on-warrant in response to the backwardation that emerged ahead of the monthly roll dates on May 18, traders said. “It’s in relation to the May backwardation; people are delivering early to ensure they’re not exposed on the day,” one trader said. “I expect more deliveries to come in this week, and also to see existing tonnages put on free-float.” The cash-to-three month spread moved into backwardation on May 9, after the three-month contract fell 6% in the first week of May. On Friday the backwardation peaked at $22.5 per tonne....

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