LME aluminium drops after FOMC meeting signals a possible rate hike

LME aluminium dropped during Wednesday's night trading after remaining unchanged for two consecutive days. The contract closed at US$1,873 per tonne yesterday, down 0.26 per cent from the previous closing of US$1,878 per tonne on Tuesday. According to the Federal Open Market Committee (FOMC) meeting, the Fed is expected to raise rate soon. Shanghai Metals Market (SMM) said in its forecast LME aluminium will "seek a breakthrough" and trade at US$1,870-1,900 per tonne on Thursday, February 23.

As on February 22, LME official cash buyer price of aluminium stands at US$1,872.5 per tonne, cash seller & settlement price is US$1,873 per tonne, 3M buyer price is US$1,877per tonne, 3M seller price is US$1,877.5 per tonne, Dec1 buyer price is US$1,920 per tonne, and Dec1 seller price is US$1,925 per tonne. The current LME official Opening Stock of aluminium is estimated at 2195375 tonnes, total Live Warrants is 1408050 tonnes, and Cancelled Warrant is 783400 tonnes.

LME aluminium premiums remain fairly unchanged across major regions globally. As on February 21, LME Aluminium US Premium stands at US$215, LME Aluminium West-Europe Premium is up by US$10 at US$95, LME Aluminium East-Asia Premium stands is same as before at US$95, and LME Aluminium South-East Asia Premium shows no change from its previous US$15.

In China, the benchmark price of aluminium on Shanghai Metal Exchange (SME) has again dropped. It is down by 1.29 per cent from its previous benchmark price of US$2,003 per tonne on Wednesday to stand at US$1,977 per tonne on Thursday, February 23.

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Aluminium contracts traded on Shanghai Futures Exchange (SHFE) declined on the second consecutive day. SHFE 1704 aluminum opened at RMB 14,205 per tonne on Wednesday, rallied slightly through the day and closed at RMB 13,955 per tonne after night trading. Trading volumes increased to 342,076 lots and positions fell 7,706 to 306,374.

Spot aluminium in China's domestic market is expected to trade at discounts of RMB 250-210 per tonne on Thursday.