Trading on aluminium continues to be influenced by the dominant long (rumoured to be Red Kite and holding up to 90 percent of cash positions), which forced the shorts to cover the January prompt date, and the subsequent rolling forward of that position has kept the backwardation bidded out through February so far too. The cash-to-three-month backwardation averaged 87 dollars /tonne in January and has averaged 94 dollars /tonne so far this month. This has caused shorts a considerable problem, as when they come to unwind or roll their nearby positions they have had to borrow into the high backwardation. On February 7, prices failed to rally higher on the option declaration date, despite there being significant call option open interest. Many of these options were abandoned, which led to delta-hedge unwinding and prices came under pressure. Official basis prices fell through the 100-day moving average on Wednesday 7 at 2,700 dollars /tonne, and then fell through the next level of support, the 200-day moving average at 2,654 dollars /tonne, the following day.
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