Shanghai in-warehouse and cif full-plate nickel premiums dramatically swung into an unprecedented discount in the week to September 24 on persistent London Metal Exchange nickel spread backwardations and widening import arbitrage losses.
China premiums hit a discount on deep spread backwardation amid frenzied offloading of material in the region European, United States premiums hold amid thin trade muted by lackluster demandLME backwardation, arb losses drive China premium to discount China full plate in-warehouse and cif full plate premiums are now trading at parity in respective $50-0 per tonne discounts, while stockholders divest material due to higher holding costs following the cash/three-month spread backwardation. The backwardation in the LME cash/three-month nickel spread is trading around $135 per tonne on September 24. It previous traded at $205 per tonne on September 20 - the narrowest the spread has been in over 12 years. The widening import arbitrage loss between the Wuxi Stainless Steel Exchange and LME further exacerbated the situation. The current arbitrage losses - estimated at 4,000-6,000 yuan ($571-857) per tonne - have led to...