Despite the large deliveries inward, including 92,875 tonnes on Monday November 18, the backwardation in the LME’s December-to-January spread remained
Total on-warrant LME aluminium stocks were now 1,009,700 tonnes, up from 788,850 tonnes on November 11. The majority of the increase was delivered into sheds in Port Klang and Johor - Malaysia now holds more than half of all LME aluminium stocks.
The typical spread and stock cycle means that a significant backwardation would entice people to deliver metal onto the exchange to push the price back down.
The delivery of metal would then swing the spreads back into contango and people would begin to pick up metal again because it is profitable to hold on the spreads. This would lead once again to lower stocks.
But the most recent delivery of stocks has failed to put a dent in the persistent December-to-January spread, or swing...