Commodities
Home›Commodities›Industrial Metals›Copper backwardation eases as LME on-warrant stocks ju…
Copper backwardation eases as LME on-warrant stocks jump
A one-day delivery of more than 20,000 tons into London Metal Exchange warehouses helped cut the cash-to-three-month backwardation to $248 a ton from as much as $545 Monday.
Copper’s backwardation on the London Metal Exchange eased after traders delivered more than 20,000 tons of copper into on-warrant warehouses, the biggest one-day build in on-warrant stock since April, OilPrice reports. The move helped unwind a squeeze that had gripped the London market over the prior week.
The cash-to-three-month spread settled at a $248-a-ton backwardation, down from as much as $545 Monday, the widest since 2021. OilPrice notes that Trafigura Group and other traders were behind a large share of the metal placed on warrant, citing people familiar with the deliveries, and a Trafigura spokesperson declined to comment.
Traders also expected additional deliveries to follow in the coming days, with the timing set around the third Wednesday of the month, when much of the LME’s liquidity concentrates. OilPrice adds that the cost of rolling a position forward one day had risen to $110 before closing at a $79 premium.
Even after last week’s recovery, on-warrant stock was down about 75% from its mid-April peak, OilPrice reports. The article also cites that a Commerce Department recommendation on refined copper duties was due June 30 and had not yet come at the time of writing.
Latest closeCopper $6.606 ▲0.2%