23 JULY 2012Commodityonline.com
Front end spreads tightening for LME Aluminum: Barclays
Edited by : AL CIRCLE
1 min read
Front-end aluminum spreads are continuing to tighten on the London Metal Exchange, which is bucking the trend seen in other base metals, according to Barclays Capital in a commodity research note.
The most recent close for front-end aluminum spreads was a contango of just over $26 a metric ton, some $16 tighter than in mid-May.
The British bank continued that, “While there has been little in the way of clear-cut fundamental tightening to justify this move in spreads, given that LME data showed there were three significant-sized shorts in the July contract versus a 30-39% dominant cash warrant holder, a short-term constraint on delivering material against those positions may have been the force behind this temporary tightening in spreads.”
“On the SHFE (Shanghai Futures Exchange), the tightness in nearby spreads for metals like aluminum and copper has eased, with the aluminum cash to three-month backwardation shrinking to $4/t from $16/t a week ago, while the copper cash to three-month back has disappeared with that spread now trading in a small contango,” Barclays concluded.
The most recent close for front-end aluminum spreads was a contango of just over $26 a metric ton, some $16 tighter than in mid-May.
The British bank continued that, “While there has been little in the way of clear-cut fundamental tightening to justify this move in spreads, given that LME data showed there were three significant-sized shorts in the July contract versus a 30-39% dominant cash warrant holder, a short-term constraint on delivering material against those positions may have been the force behind this temporary tightening in spreads.”
“On the SHFE (Shanghai Futures Exchange), the tightness in nearby spreads for metals like aluminum and copper has eased, with the aluminum cash to three-month backwardation shrinking to $4/t from $16/t a week ago, while the copper cash to three-month back has disappeared with that spread now trading in a small contango,” Barclays concluded.
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