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LONDON: Calm has returned to the London Metal Exchange (LME) copper market after last month’s storm, which forced the exchange to step in to protect those caught with a short position.

The LME cash premium, which rocketed to an unprecedented $1,103.50 per tonne prior to the intervention, was valued at just $15.50 at Tuesday’s close.

The cost of an overnight short position roll, which was $125 per tonne before the LME imposed its lending cap, is currently trading in small contango.

Regulatory action has been complemented by a gradual rebuild in LME on-warrant copper stocks, which fell to a multi-year low of just 14,150 tonnes in the run-up to the October chaos.

The collapsing time-spreads suggest much more is on its way with all eyes now on China, where the country’s copper smelters have openly talked about shipping large amounts of metal to LME warehouses. The world’s largest buyer turning on the export taps is a rare phenomenon and one that attests to how tight availability is in the rest of the world.

The amount of copper making its way on to LME warrant has so far been underwhelming given the extreme level of the cash premium last month.

Arrivals since the middle of October have totalled 51,125 tonnes, split across LME warehouses in Europe (19,025 tonnes), Asia (18,675) and the United States (13,425 tonnes).

Thanks to a conspicuous absence of cancellations since the LME’s intervention, on-warrant stocks have rebuilt to 62,100 tonnes.

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