LIVE FUTURES REPORT 17/12: LME aluminium spreads narrow further following fresh 42.5kt inflow

London Metal Exchange aluminium stocks continued to climb on Tuesday December 17, with 42,500 tonnes of material delivered into warehouses in Port Klang, Malaysia.

Total LME aluminium stocks, now at 1,444,300 tonnes, are up by 53% from 942,125 tonnes on November 11, when sizeable deliveries first emerged in response to LME aluminium nearby spreads being in backwardation.

But while the benchmark cash/three-month spread was pushed back into a slim $5.25-per-tonne contango on December 11 from a $4.25-per-tonne backwardation on December 10, the contango has narrowed from $13.25-per-tonne on Monday to a lesser $8-per-tonne contango today.

This narrowing of spreads comes despite 70,900 tonnes of material delivered back onto the LME on Monday and today, though the backwardation in the cash-to-January spread has narrowed somewhat, from $7 per tonne yesterday to $4.25 per tonne today.

Additionally, 30,300 tonnes of material was freshly canceled as of 9am today, leaving on-warrant stocks at 1,321,200 tonnes compared with 1,309,000 tonnes on Monday. Of this 30,300 tonnes, 29,500 tonnes were freshly canceled in Port Klang following the 14,675 tonnes re-warranted in the region on Monday.

Meanwhile, the LME three-month aluminium price has weakened so far in Tuesday’s morning session, dipping a marginal 0.5% from yesterday’s close to trade around $1,768 per tonne, seemingly capped by weak demand, and sizeable stock deliveries.

Elsewhere, 6,090 tonnes of nickel was also put back into the LME warehousing system on Tuesday while a lesser 72 tonnes of material were re-warranted at the same time.

The contango in nickel’s cash/three-month spread has narrowed steadily, trading around $44.75 per tonne today from $61 per tonne on December 3 and a slight $5-per-tonne backwardation has opened up in the three-month/March spread.

The three-month nickel price has been capped accordingly, trading down by $5 per tonne from Monday’s close at $14,195 per tonne this morning.

Other highlights

  • The US dollar index is trading up 0.04% at 97.21 this morning, exerting a slight dampening effect on already lackluster interest in the base metals.
  • Copper was the only LME base metal in which inventory outflows exceeded inflows this morning despite a $7.50-per-tonne backwardation opening up in the cash-to-January spread. 5,950 tonnes of material left LME-approved global this morning versus a lesser 700-tonne inflow, leaving total stocks at 162,225 tonnes. 400 tonnes of material was freshly canceled at the same time.

Amy Hinton

amy.hinton@fastmarkets.com

Published

Amy Hinton

December 17, 2019

10:26 GMT

London