LME Cash–3M contango tightens further as April–May backwardation persists (bearish for spot premiums around the world)
March 28, 2019
Today, the Cash–April contango experienced a significant tightening to $7.50 per mton from yesterday’s $10.75 per mton, while the April–May backwardation stood unchanged at $0.50 per mton, as the lingering “back” in the first week of May held at $11.00 per mton. Conversely, the May–June contango widened to $8.50 from $7.50 per mton. As a result, the Cash–3M contango narrowed today to a two-month low of $16.75 per mton, from $19.25 per mton. We estimate that at the current level, the Cash-3M contango is no longer supportive of cash-and-carry deals for most players (bearish for spot premiums, as the financing of metal becomes uneconomic).
More details in full report.