The London Metal Exchange cash/three-month nickel spread was trading in a $79 per tonne backwardation at the close on Tuesday August 27, its narrowest since July 2007 when it traded in a backwardation of $199 per tonne.
Historically trading in a healthy contango, nickel's forward curve has recently become prone to pockets of tightness, attributed mostly to technical trading activity. It most recently slipped into a $11 per tonne backwardation on August 14 from a $6 per tonne contango on August 6. Market participants have cited the upcoming September contract expiry date as a cause of the recent backwardation, which will theoretically ease when position holders are forced to either exit or roll their positions forward to the next...