LME aluminium drops further; likely to retest resistance at US$1,939

LME aluminium is finding it difficult to hold ground above US$1,900 per tonne. The light metal contract is faltering around US$1,900 per tonne, and the strengthening US dollar index suggests that the trough in the LME aluminium price trend will further deepen in the near term. As on Tuesday, July 18, the contract closed at US$1,887 per tonne, down from the previous day’s close of US$1,901 per tonne on Monday, July 18.

Going by Reuters’ technical analysis, LME aluminium seems to be retesting a resistance at US$1,939 per tonne, a break above which could lead to an increase to US$1,953 per tonne, which is unlikely in the foreseeable future.

According to Shanghai Metals Market projections, LME aluminium will find support at US$1,900 per tonne and remain range-bound at US$1,910-1,940 per tonne on Wednesday, July 19.

As on July 18, LME official cash buyer aluminium price (Bid Price) stands at US$1,886 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,887 per tonne, 3M Bid Price is US$1,905 per tonne, 3M Offer Price is US$1,907 per tonne, Dec1 Bid Price is US$1,940 per tonne, and Dec1 Offer Price is US$1,945 per tonne. The current LME official Opening Stock of aluminium is estimated at 1373350 tonnes, total Live Warrant is 1059650 tonnes, and Cancelled Warrant is 313700 tonnes.

There is slight drop in LME aluminium premiums in the global market. As on July 18, LME aluminium premium for the US has dropped to US$170 from an earlier US$180. For the rest of the regional markets, premiums remain unchanged. LME Aluminium West-Europe Premium stands at US$80, LME Aluminium East Asia Premium remains unchanged at US$15, and LME Aluminium South-East Asia Premium is US$15 (per tonne).  

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SME and SHFE Aluminium Price Trend

The benchmark aluminium price at Shanghai Metal Exchange (SME) has dropped at US$2,097 per tonne on Tuesday, July 18, from Monday’s benchmark price of US$2,099 per tonne.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,440 per tonne on Tuesday, July 18, and then fell to RMB 14,285 per tonne with the news of output cut in Shandong and Xinjiang hitting market. Later, the contract rallied and ended at RMB 14,350 per tonne. SMM predicts that SHFE 1709 aluminium will move at highs in the range of RMB 14,300-14,500 per tonne on Wednesday, July 19.

Spot aluminium in east China market is expected to trade at discounts of RMB 170-150 per tonne over SHFE 1708 aluminium on Wednesday.

The market focus will be on US crude oil inventories June housing starts and construction permits, on Wednesday, SMM said.