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4,134 tonnes of material were taken out of LME-approved global sheds as of 9am this morning versus just 696 tonnes of metal delivered in, leaving LME global nickel inventory at 83,694 tonnes.
Just 84 tonnes of material were freshly-canceled at the same time, with on-warrant stocks now amounting to 29,910 per tonne.
Controversy continues to surround the nature of these drawdowns, with the London Metal Exchange having contacted all members to ask for clarification on client activity in the nickel market amid mounting concern over ever-tightening stocks and doubts that they are being drawn down to cover physical requirements.
“This is no surprise because, at the current rate of cancellations, were they to continue, there would be almost no stock left by the end of this week,” Kingdom Futures CEO Malcolm Freeman said in a morning note.
Nonetheless, nearby LME nickel spreads remain in contango, with the benchmark cash/three-month spread trading in a $15 per tonne contango today, slightly narrower than $20 per tonne yesterday but significantly wider than the $180 per tonne backwardation of October 21.
“If the LME request to members shows that there is nothing being manipulated and that Tsingshan are going to genuinely take the canceled metal out of warehouses for consumption there is really little the LME can do in the face of supply loss from Indonesia,” Freeman added. “If this turns out to be reality, the recent spread contango could be very short lived and prices of $18,000 and higher could be a distinct possibility.”
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