SPOTLIGHT: Copper backwardations here to stay; warrant cancellations rocket
Apr 25, 2012 | 09:16 AM
The backwardations across the copper spreads on the London Metal Exchange are likely to remain in place for the foreseeable future, according to traders, meaning that market participants must grapple with a new trading environment at least for the time being.
The red metal settled at a three-month price of $8,200/05 per tonne on Wednesday April 25, as short covering began to take hold on the market. Prices had slipped below $8,000 per tonne earlier in the week and had threatened to fall further.
A number of market participants have now said they believe the short covering is coming from China, as their positions are squeezed.
“We’ve seen so much two-way business out of China today that it’s difficult to see who has been squeezed and who hasn’t. I’ve no doubt that [Chinese shorts] are a part of the game,” an LME broker said.
“There’s liquidity and that’s helpful.....
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