The industrial metal market shows no signs of cooling down

The global economic recovery and the need for infrastructure construction are pumping more heat into the metals market. Nearly all base metals on the London and Shanghai bourses are on hold (short-term futures costs are higher than long-term), indicating tight supply.

The market structure showed a sharp decline in stocks controlled by the London Metal Exchange and the Shanghai Futures Exchange. The price difference between the spot contract and the 3-month futures contract is at a record level, while the amount of copper held on exchanges has dropped to an alarming level.

The concentration of transactions at the LME is also creating the risk of a sharp increase in spot prices. The LMEX index closed at a record high on Thursday, and the trend may not be over yet.