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PrintAluminum prices slipped into backwardation in Monday's official session on the London Metal Exchange.
Three-month aluminum settled at $2,119 per tonne, down from $2,149 at the end of last week, and cash aluminum settled at $2,121 per tonne, down from $2,143 in the same comparison, putting the cash-to-three-month spread in a $2 backwardation.
"It could be fairly tight for a few days but I think it will disappear then," an LME Category I trader said. "People seem to be assuming it's a big warrant shift, which tends to go off the boil within a few days."
Volatility in the aluminum spread and a backwardation in the nearby dates on the LME last week had led many market participants to forecast a backwardation in the cash-to-three-month spread for early this week.
The cash-to-three-month contango narrowed to just 50 cents per tonne in the Aug. 6 official session on the LME but flared back to $6 by the end of the week.
There will be no clear direction for the spread for the next few days, according to a second trader. "We won't get a real indication for another couple of days . but we're long and enjoying it," he said.
Aluminum stocks fell by 4,425 tonnes, taking total inventories in LME-bonded warehouses to 4,377,975 tonnes as of Monday morning.
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