FOCUS: Temporary tight nearby spreads ‘spook’ European Al market; traders still bullish

Aggressive offers for aluminium in Europe were reported to Metal Bulletin after a small backwardation appeared in nearby London Metal Exchange spreads last week, although traders remain bullish now that spreads are in contango.

A backwardation of $2 was seen on the October/November dates on Tuesday October 3, having traded closer to $8-10 contango previously. The tightness largely centred on dates from October 30 to November 6, traders said. The following day, buyers spoke of offers and even some concluded business – particularly on duty-unpaid aluminium in Rotterdam – at around $80-85 per tonne on an in-warehouse basis, suggesting that some stockholders were keen to offload metal. Most offers from elsewhere were still between $90-95 per tonne at the time. “I think this was a wake-up call for some of the physical players out there that these sudden backwardations in nearby spreads can happen at any time and it probably just spooked a few stockholders into wanting to offload their material,” a European trader said. “I would expect people probably thought it was going to be August all...


Ian Walker

October 12, 2017

13:53 GMT