Increased risk of an LME backwardation for next two weeks (would be bearish for spot premiums).
March 7, 2019
Risk of nearby backwardations increased as conditions tighten further ahead of March’s third-Wednesday (still two weeks from today). The LME Cash prices closed today at level with March 20 (third-Wednesday) prices after yesterday’s contango of $2.50 per mton, while the Tom–Next spread settled at the sharpest backwardation in two months at $5.00 per mton after yesterday’s contango of $0.62 per mton. The Tom–Next spread is the fee exchanged for rolling over an LME contract expiring tomorrow into Cash or two business days ahead. Nevertheless, the Cash–3M contango widened a bit as March–April loosened.
More details in full report.