LME aluminium to trade within US$1,906-1,927/t; mixed signals and no support ahead

LME aluminium, as expected, failed to hold steady above US$1,900 level. After night trading on Thursday, July 20, the light metal fell to US$1,898 per tonne from its earlier gain of US$1,907 per tonne on July 19. Though the US dollar is weak, LME aluminium does not seem to be drawing any support from that; moreover, crude oil prices are also directionless ahead of the OPEC meeting. So, the contract will find no support.

Reuters’ technical analysis suggests that signals are mixed for LME aluminium, and will become clear only when the light metal comes out of a neutral range of US41,917-1,928 per tonne. A break above the upper limit could take LME aluminium to retest US$1,939, whereas, a break below US$1,917 could cause a loss in the range of US$1,895-1,904 per tonne.  

According to Shanghai Metals Market projections, LME aluminium will move at US$1,906-1,927 per tonne on Friday, July 21.

As on July 20, LME official cash buyer aluminium price (Bid Price) stands at US$1,897.50 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,898 per tonne, 3M Bid Price is US$1,923.50 per tonne, 3M Offer Price is US$1,924 per tonne, Dec1 Bid Price is US$1,965 per tonne, and Dec1 Offer Price is US$1,970 per tonne. The current LME official Opening Stock of aluminium is estimated at 1362675 tonnes, total Live Warrant is 1059725 tonnes, and Cancelled Warrant is 302950 tonnes.

LME aluminium premiums remain unchanged across major global markets. As on July 20, 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).  

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SME and SHFE Aluminium Price Trend

The benchmark aluminium price at Shanghai Metal Exchange (SME) has dropped from US$2,105 per tonne on Thursday, July 20, to US$2,097 per tonne on Thursday, July 21.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,430 per tonne on Thursday, July 20, and then jumped to RMB 14,520 per tonne. But with the exit of some longs, the contract fell and closed at RMB 14,420 per tonne. SMM predicts that SHFE 1709 aluminium will move at highs in the range of RMB 14,330-14,490 per tonne on Friday, July 21.

Spot aluminium in east China market is expected to trade at discounts of RMB 170-130 per tonne over SHFE 1708 aluminium on Friday.

The market focus will be on Canada’s June CPI, May retail sales and the US dollar index movement on Friday, SMM said.