LME aluminium rises with support from crude oil but likely to lose the gain again

LME aluminium staged a reversal after falling on Wednesday on news of the FOMC meeting that hinted at a possible Fed rate hike. The contract closed at US$1,882.50 per tonne after night trading on Thursday, February 23. The Federal Reserve has hinted at multiple short-term interest rate increases this year, a sign that the central bank wants to rein in inflation and expects the recent economic growth to continue. Crude oil prices have also spiked after OPEC confirmed that it would stick to its agreement on production cut. These two factors combined have buoyed LME aluminium prices up.

Shanghai Metals market (SMM) in its forecast said LME aluminium will test support at the 20-day moving average and will trade at US$1,850-1,880 per tonne on Friday, February 24.

LME Price Source: http://www.lme.com 

As on February 23, LME official cash buyer price of aluminium stands at US$1,882 per tonne, cash seller & settlement price is US$1,882.50 per tonne, 3M buyer price is US$1,890per tonne, 3M seller price is US$1,890.5 per tonne, Dec1 buyer price is US$1,933 per tonne, and Dec1 seller price is US$1,938 per tonne. The current LME official Opening Stock of aluminium is estimated at 2186475 tonnes, total Live Warrants is 1376650 tonnes, and Cancelled Warrant is 809825 tonnes.

In China, the benchmark price of aluminium on Shanghai Metal Exchange (SME) has fallen further. The price is down by 1.16 per cent from its previous day's price of US$1,977 per tonne on Thursday to stand at US$1,954 per tonne on Friday, February 24.

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Aluminium contracts traded on Shanghai Futures Exchange (SHFE) mostly dropped sharply overnight. SHFE 1704 aluminum opened at RMB 14,090 per tonne on Thursday and then dipped to end at RMB 13,840 per tonne after night trading. Trading volumes were up to 310,220 lots and positions were down 16,234 to 290,140. The contract will test support at the 40 and 60-day moving averages and move between RMB 13,400-13,700 per tonne on Friday.

Spot aluminium in China's domestic market is expected to trade at discounts of RMB 180-140 per tonne on Friday.