March 15, 2019
The April–May contango widened to $4.25 per mton from a yesterday’s five- month low of $2.25 per mton. Additionally, the March–April contango widened to $12.75 from $11.50 per mton, while the Cash-March contango narrowed to $1.00 from $2.25 per mton. As a result, the LME Cash–3M contango widened to $25.75 from yesterday’s one-week low of $24.00 per mton. We estimate that the Cash– 3M contango is now wide enough for most players to profitably finance short-term cash-and-carry deals (supportive for spot premiums). Nevertheless, risks of increasing LME warrant concentrations remain high (bearish for premiums).
More details in full report.