We have been impressed this year by how persistent the drawdown in LME stocks has been. The fact that it continued uninterrupted throughout the summer – a time of the year usually characterised by rising stocks – is a particularly bullish sign of tight supply and steady demand. In China, SHFE stocks have fallen, premiums have remained firm and imports have held at high levels (and have even risen in recent months) despite a negative SHFE-LME arbitrage.
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