LME aluminium breaks below key support at $1,891; further drop in forecasts

Rising global inventory and weakening demand in the foreign market seems to have weighed too heavily on LME aluminium. The light metal contract upon failing to draw support from a weak dollar bent under the pressure and settled at US$1,877 per tonne on Wednesday, July 12, down 0.1 per cent from its previous day’s close of US$1,879 per tonne.

According to Reuters’ technical analysis, LME aluminium has broken below a key support at US$1,891; hence, the downtrend. It is now likely to test a resistance at US$1,912 per tonne, a break above which can lead to a gain to the next resistance at US$1,926.

Shanghai Metals Market predicts that LME aluminium may fell below the 20-day moving average and keep trading at US$1,880-1,900 per tonne on Thursday, July 13.

As on July 12, LME official cash buyer aluminium price stands at US$1,875 per tonne, cash seller & settlement aluminium price is US$1,877 per tonne, 3M buyer price is US$1,893 per tonne, 3M seller price is US$1,893.50 per tonne, Dec1 buyer price is US$1,925 per tonne, and Dec1 seller price is US$1,930 per tonne. The current LME official Opening Stock of aluminium is estimated at 1392625 tonnes, total Live Warrant is 1063425 tonnes, and Cancelled Warrant is 329200 tonnes.

LME aluminium premiums remain unchanged across major markets worldwide. As on July 11, LME aluminium premium for the US stands at US$180, LME Aluminium West-Europe Premium stands at US$80, LME Aluminium East-Asia Premium is US$105, and LME Aluminium South-East Asia Premium is US$15 (per tonne).

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The benchmark aluminium price at Shanghai Metal Exchange (SME) has edged higher at US$2,071 per tonne on Thursday, July 13, up 0.63 per cent from Wednesday’s benchmark price of US$2,058 per tonne.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,235 per tonne on Wednesday, July 12, and then dropped to RMB 14,205 per tonne. Later, the contract rallied to RMB 14,280 per tonne and finally closed at RMB 14,200 per tonne. SMM predicts that SHFE 1709 aluminium will fluctuate between RMB 14,150-14,300 per tonne on Thursday, July 13.

Spot aluminium in China domestic market is expected to trade at discounts of RMB 100-60 per tonne on Wednesday.

The market focus will be on China’s June balance sheet, annual import and export, US’s annual PPI and initial jobless claim from the week ending July 7, on Thursday, SMM stated.