…or maybe it shouldn't be. Given the sudden reappearance of cash tightness Friday and the associated flip back into backwardation across the nearby market structure, we were half expecting a big raid on the LME stocks in the run-up to this Wednesday's options declaration date.
That's exactly what happened yesterday with a 24,750t of cancellations at Singapore, split between 12,025t of ingot and 12,725t of T-bar.
Along with more modest draw activity at Pusan and Helsingborg, the impact has been to transform the LME stocks picture. Fresh cancellation activity has been highly moderate in recent weeks, resulting in a falling ratio of cancelled tonnage and a slowdown in "out" side activity.
The ratio has just been boosted from 3.8% on Friday to 7.4% yesterday and if this cancelled material moves quickly out of the system, it will probably result in the headline figure breaking down through the recent Nov 13 low of 676,500t, which itself was the lowest level since February of this year.
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