LME aluminium regains strength as dollar weakens, SHFE aluminium moves in a tight range

LME aluminium reversed the temporary drop and regained its upward momentum as the US dollar index weakened further after the release of not-so-inspiring Fed’s May policy meeting minutes. The light metal traded globally closed at US$1,944 per tonne on Wednesday, May 24, rising 0.93 per cent from its previous close of US$1,926 per tonne.

Reuters’ technical analysis suggests that LME aluminium is biased to retest strong support at US$1940 per tonne. A break below the level can lead to a further loss to US$1,933 per tonne.

According to Shanghai Metals Market (SMM) forecast, LME aluminium will rise to US$1,935-1960 per tonne on Thursday, May 25.

As on May 24, LME official cash buyer aluminium price stands at US$1,943 per tonne, cash seller & settlement aluminium price is US$1,944 per tonne, 3M buyer price is US$1,943per tonne, 3M seller price is US$1,944 per tonne, Dec1 buyer price is US$1,968 per tonne, and Dec1 seller price is US$1,973 per tonne. The current LME official Opening Stock of aluminium is estimated at 1480025 tonnes, total Live Warrants is 964300 tonnes, and Cancelled Warrant is 515725 tonnes.

LME aluminium premiums, as on May 23, remain unchanged across major regions. LME Aluminium East-Asia Premium stands at US$110, LME Aluminium US Premium is US$215, LME Aluminium West-Europe Premium is US$95, and LME Aluminium South-East Asia Premium remains unchanged at US$15 (per tonne).

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The benchmark aluminium price at Shanghai Metal Exchange (SME) stands at US$2,010 per tonne on Thursday, May 25, up 0.09 per cent from the benchmark aluminium price of US$2,008 per tonne on Wednesday, May 24.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1707 aluminium opened at RMB 14,055 per tonne on Wednesday, May 24. Then the contract started falling due to short selling and dipped to RMB 13,950 per tonne. During afternoon trading hours, the futures aluminium price recovered some losses and closed at RMB 13,985 per tonne.

SMM predicts that SHFE 1707 aluminium will continue to struggle at around the moving averages in the short term and on Thursday, May 25, will move in the range of RMB 13,900-14,100 per tonne.  

Spot aluminium in east China market is expected to trade at discounts of RMB 110-70 per tonne over SHFE 1706 aluminium contract on Thursday, May 25, SMM said.

The market focus will be on last week’s US initial jobless claims, OPEC’s half-year meeting and minutes of the US Fed’s May policy meeting due for release today.