LME aluminium rises, but can the uptrend hold up?

LME aluminium gained some strength buoyed by optimism generated by the scheduled release of policy decisions by the Bank of Japan and European Central Bank today. The lightmetal contract rose by 1.05 per cent from its previous day’s close of US$1,887 per tonne to US$1,907 per tonne on Wednesday, July 19.

Reuters’ technical analysis suggests that LME aluminium retest a support at US$1,917 per tonne, a break below which could lead to loss to US$1,903 per tonne, while a break above the level could lead to a gain in the range of US$1,953-1,962 per tonne in the foreseeable future.

According to Shanghai Metals Market projections, the uptrend in LME aluminium will be a limited one; the contract will move at US$1,915-1,935 per tonne on Thursday, July 20.

As on July 19, LME official cash buyer aluminium price (Bid Price) stands at US$1,906 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,907 per tonne, 3M Bid Price is US$1,935 per tonne, 3M Offer Price is US$1,935.50 per tonne, Dec1 Bid Price is US$1,970 per tonne, and Dec1 Offer Price is US$1,975 per tonne. The current LME official Opening Stock of aluminium is estimated at 1369125 tonnes, total Live Warrant is 1059725 tonnes, and Cancelled Warrant is 309400 tonnes.

LME aluminium premiums remain largely unchanged across major global markets. As on July 19, LME aluminium premium for the US stands at US$170, 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).  

{googleAdsense}

SME and SHFE Aluminium Price Trend

The benchmark aluminium price at Shanghai Metal Exchange (SME) has also edged higher in tandem with LME aluminium. SME benchmark aluminium price on Thursday, July 20 stands at US$2,105 per tonne, up from Wednesday’s benchmark price of US$2,096 per tonne.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,435 per tonne on Wednesday, July 19, and then fell to RMB 14,370 per tonne with the exit of the longs. Later, the contract rallied to RMB 14,500 per tonne before closing at RMB 14,480 per tonne. SMM predicts that SHFE 1709 aluminium will move at highs in the range of RMB 14,350-14,560 per tonne on Thursday, July 20.

Spot aluminium in east China market is expected to trade at discounts of RMB 180-140 per tonne over SHFE 1708 aluminium on Thursday.

The market focus will be on the UK’s seasonally adjusted retail sales in June, European Central Bank’s (ECB) July interest rate decision, the number of US initial jobless claims last week and eurozone CCI in July on Thursday, SMM said.