LME Base Metals Market Indicates Robust Surplus

The weakened demand has resulted in recovery of metal stockpiles on the LME from historically low levels.

SEATTLE (Scrap Monster): Almost all major base metals market on the London Metal Exchange (LME) is reportedly displaying signs of adequate supply, driven by dip in demand due to slowdown in global economic growth. The surplus market indicates that the stocks of these metals are sufficient to meet near-term demand.

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All the six key metals that dominate trading on the exchange faces contango- a futures market occurrence marked by futures contract prices rising above the spot prices. This also indicates that investors and traders expect the prices of these base metals to go higher in the coming months. Generally, contango is regarded as a negative signal.

The spreads for copper are seen hovering near the widest on record. The discount for spot copper relative to three-month futures had recently touched the lowest since 2009 as a percentage of price. The market participants expects further jump in surplus of refined copper metal, despite anticipated cut in mine supply. It must be noted that copper stockpiles in China had slipped to critically low levels earlier this year.

The weakened demand has resulted in recovery of metal stockpiles on the LME from historically low levels.

The copper futures on the LME declined. All other major metals including aluminum and zinc too fell.

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