The benchmark London Metal Exchange cash/three-month spread is once more trading in a contango of around $20 per tonne on Tuesday October 22 following a period of deep and sustained backwardation up until yesterday when the spread was in a $108 per tonne backwardation.
The LME cash/three-month nickel spread has traded in an intermittent backwardation since January 2019. It slipped into a $39 per tonne backwardation on August 15, which widened to $240 per tonne of October 1 - its widest point in the year so far. But counter to a significant backwardation, which would typically be expected to attract stock back onto exchange amid elevated holding costs, half of LME inventory has been withdrawn since mid-September, leaving stocks recently at 87,132 tonnes. Consistent drawdowns in these conditions gave rise to speculation Chinese consumers including...