LORD COPPER: Fast-forward to the end of the copper backwardation

May 03, 2012 | 11:00 PM |

So, copper remains in a cash-to-three-month backwardation on the London Metal Exchange. Not that many years ago, that almost seemed like the natural state of affairs. But then the LME lending guidance was introduced, and the idea of artificially created backs seemed to be a thing of the past. So is what we see at the moment a true reflection of global supply and demand, or are there other forces at work? Certainly, the recent very large jump in cancelled warrants, which now stand at 73,600 tonnes, seems to imply a level of activity not totally connected with the physical world. It seems likely that the purpose of that cancellation is to adjust a dominant position to bring it below the threshold that requires compliance with the lending rules. The possibility of such manoeuvres has always been....