LONDON (Commodity Online): Time spreads for copper are tightening on short covering on both the London Metal Exchange and Shanghai Futures Exchange, said Barclays Capital in a daily research note.
According to Barclays, tightening LME inventories are also playing a role. The contango in SHFE copper time spreads, both nearby and further forward, has tightened, with the cash to three-month contango more than halving from $125 a metric ton to $55.
“The SHFE/LME spread has also narrowed, with the ratio rising to 7.2 from a nadir earlier in the month of 6.9.” Meanwhile, final Chinese trade data for January “painted a picture of softer import demand” for base metals, bank added.
However, the bank cautions that the timing of Chinese Lunar New Year holidays can skew January and February data, making year-on-year comparisons difficult.
“Combining the January and February data addresses this issue, so we will not have the full picture until the February data are published,” Barclays concluded.
