ABSTRACT The relatively small family of ultra-compact X-ray binary systems is of great interest for many areas of astrophysics. We report on a detailed X-ray spectral study of the persistent neutron star low-mass X-ray binary 1RXS J170854.4−321857. We analysed two XMM–Newton observations obtained in late 2004 and early 2005 when, in agreement with previous studies, the system displayed an X-ray luminosity (0.5–10 keV) of ${∼} 1\times 10^{36}\, \mathrm{erg~s}^{-1}$. The spectrum can be described by a Comptonized emission component with Γ ∼ 1.9 and a distribution of seed photons with a temperature of ∼0.23 keV. A prominent residual feature is present at soft energies, which is reproduced by the absorption model if overabundances of Ne and Fe are allowed. We discuss how similar observables, which might be attributed to the peculiar (non-solar) composition of the plasma donated by the companion star, are a common feature in confirmed and candidate ultra-compact systems. Although this interpretation is still under debate, we conclude that the detection of these features along with the persistent nature of the source at such low luminosity and the intermediate–long burst that it displayed in the past confirms 1RXS J170854.4−321857 as a solid ultra-compact X-ray binary candidate.