Since our last monitor, 3-Months LME prices have fluctuated between a low of 2,034 dollars/tonne and a high of 2,254 dollars/tonne, which is close to the current price level. Prices benefited from easing concerns regarding Greece's debt issues and an increase in oil prices, which have increased by 12% in the past four weeks; nevertheless, LME 3-Months aluminium prices remain below highs of 2,356 dollars reached in mid-January. Open interest has also edged higher in the past few weeks, indicating that some longs have re-entered the market. The cash to 15-Months contango averaged 126 dollars/tonne in February, marginally narrower than January's 128 dollars/tonne average. Given this slightly reduced contango, off-warrant warehouse financing deals are still attractive, but less so than previously. Chinese aluminium prices were slightly higher in a Lunar New Year-shortened month, but as with LME prices, they remain below January's highs. Much of this represents the pre- and post-Chinese New Year lull. Chinese downstream plants operated at reduced capacity between the end of the Lunar New Year holiday and the Lantern festival on the 28~(th) of February, as many employees took extended holidays in order to return to their hometowns. Currently the SHFE-LME price spread means that the arbitrage is only positive on a tolling basis, whereas on a non-tolling basis, the arbitrage is negative.
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