LME aluminium rises amid dollar exchange rate worries; SHFE prices to keep diverging

The dollar gave up its earlier gains against Japan's yen and the euro after key U.S. jobs data was released last Friday. President Trump's newly elected office is yet to publish the details of tax reduction and government expenditures. This, along with the market worries toward global trade and exchange rate of the U.S. dollar has weighed down the dollar index sending LME aluminium prices up from their current lows. The contract closed at US$1,812 per tonne after Monday's night trading, up 0.22 per cent from the previous day's closing of US$1,808 per tonne. Shanghai Metals Market (SMM) forecast says LME aluminium will move in the range of US$1,820-1,840 per tonne on Tuesday.

As on February 6, LME official cash buyer price of aluminium stands at US$1,811 per tonne, cash seller & settlement price is US$1,812 per tonne, 3M buyer price is US$1,826 per tonne, 3M seller price is US$1,826.5 per tonne, Dec1 buyer price is US$1,870 per tonne, and Dec1 seller price is US$1,875 per tonne. The current LME official Opening Stock of aluminium is estimated at 2256000 tonnes, total Live Warrants is 1643175 tonnes, and Cancelled Warrant is 605950 tonnes.

In China, the benchmark price of aluminium on Shanghai Metal Exchange (SME) stands at US$1,924 per tonne on Tuesday, February 7, down 1.18 per cent from the Monday’s price of US$1,947 per tonne.

On Monday, aluminium traded on Shanghai Futures Exchange- SHFE 1703 aluminium ranged narrowly after opening at RMB 13,865 per tonne. The contract finally closed at RMB 13,630 per tonne after night trading. SMM says SHFE 1703 aluminium will range between RMB 13,600-13,800 per tonne on Tuesday with mixed factors.

Spot aluminium in China's domestic market is expected to trade at discounts of RMB 360-320 per tonne on Tuesday.

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The National Bureau of Statistics (NBS) data shows profit at China's domestic large non-ferrous metals producers improved in 2016 from the previous year. Profit at smelters and rolling processors increased 42.9 per cent year-on-year, while that at mining and dressing industry was only up 9.7 per cent year-on-year, SMM reports.