Commodities Comment :Spreading weight to the front foot

Copper’s forward curve has reverted sharply to a backwardation at the frontend in recent days as successive days of warehouse warrant cancellationscompounded a persistent (and we think growing) dominant warrant position tosqueeze the near dates. Spreads softened on Wednesday after news of a13.5kt fresh load-in to NOLA was released, but not by much by the close, withborrowing ongoing. In other metals we have also seen tightening emerge:Aluminium’s steady $40/t cash-3 contango has shifted gradually to ~$20recently and nickel has tucked in to a ~$30/t contango from closer to $50/tpreviously, while the tin back soared once again to >$500/t at one stage(though with noticeably less effect on the flat price this time). We look into thelikely reasons and potential future implications.