Aluminum futures market under stress from december supply shock reuters gender roles in society today

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SYDNEY (Reuters) – The aluminum market is showing signs of severe stress as one investor has scooped up the majority of available cash metal, roiling prices and stoking supply concerns amid a revival in demand from the automotive and construction sectors.

Traders wanting to roll over contracts must pay London Metal Exchange prices that are close to two-year peaks and the cost could spike further as record premiums, the charge to obtain physical metal, encourage traders to hoard.

The cost of rolling a short cash position for delivery tomorrow or the next day has soared above $7 per contract for the four trading days since a dominant warrant holder appeared on Nov. 26 as short holders raced to cover their positions.

The spread between spot and three-month prices has swung in and out of backwardation in recent months, meaning cash is more expensive than later-dated contracts.


It is a rare price structure for the so-called tom-next spread, reflecting mounting concerns about immediate availability.

“With year-end liquidity factors also starting to come into play, there may well be scope for another bout of tightness as we head toward the end of the month,” said analyst Leon Westgate at Standard Bank.

LME data <0#LME-WHT> released on Wednesday but referring to Monday’s positions showed that a single participant was holding 50-80 percent of available aluminum stocks on the LME, which handles the bulk of trade in the metal.

The LME does not identify investors holding positions and traders had no clear idea who the investor was basketball quotes for girls. But data showed that the firm doing the buying bulked up its position above the 50 percent threshold last Wednesday.

LME rules limit the profit a speculator can make by hoarding much supply on any day that traders with short positions are unable to cover them at the close.

Any party holding a position worth over half of LME available stocks must supply metal to short-position holders at very modest price premiums.

Hynes said aluminum was benefiting from a broad-based pick-up in demand from the auto sector and non-residential construction us stock market futures quotes. U.S. auto sales hit an annualized rate of about 17.1 million units in November, the best pace for that month since 2003.

Supply has been hard to get code c online. Stock built up in the wake of the 2008 financial crisis has been tied up in financing deals or in logjams at warehouses, now the subject of litigation in the United States.

Financing deals made possible by cheap money after the crisis have locked millions of tonnes of aluminum away from the market marketing future. In such deals, a bank or trader buys aluminum, simultaneously selling it forward at a profit, having locked in costs such as rent, insurance and financing.

“On a fundamental level, I suppose you just have to dismiss it as the stocks are there, but they’re just tightly held,” said a broker in Hong Kong.

Some 4.3 million tonnes of aluminum is held in LME sheds and a similar volume is estimated to be held outside exchange sheds where rent is cheaper eu to usd conversion. Much of this will be hedged through short positions on the LME.

LME open interest data shows short aluminum positions for December stand at 1.22 million to 2.32 million tonnes, compared with 1.02 million to 1.55 million in long position.

Ballooning costs to hold metal mean some may choose to forgo juicy premiums – benchmark in Asia is at $420 on top of cash LME – and deliver metal to LME warehouses instead, putting a brake on rising premiums just as producers and users are set to agree Asian benchmark terms for the first quarter of next year.

Traders said they expected only a small $10-$20 increase in term premiums for the first quarter, with negotiations expected to conclude as soon as Friday.

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