LME aluminium price volatility could extend with the growing resistance

The recent volatility in LME aluminium prices seems to be extending further. The light metal contract which edged marginally higher at US$1,901 per tonne on Friday, July 21, fell again to US$1,890 per tonne on Monday, July 24. The drop in aluminium prices can also be partly attributed to the US dollar index that is regaining strength from its last week’s lows.

Reuters’ technical analysis suggests that LME aluminium may rise into US$1,929-1,936 per tonne range in the short term. There is a support at US$1,913 per tonne, a break below which could a loss to US$1,898 per tonne.

According to Shanghai Metals Market forecast, LME aluminium will hover in the range of US$1,905-1,925 per tonne on Tuesday, July 25, as resistance is intensifying.

As on July 24, LME official cash buyer aluminium price (Bid Price) stands at US$1,900.50 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,901 per tonne, 3M Bid Price is US$1,925.50 per tonne, 3M Offer Price is US$1,926 per tonne, Dec1 Bid Price is US$1,968 per tonne, and Dec1 Offer Price is US$1,973 per tonne.

LME aluminium premiums remain unchanged across major regions globally. As on July 21, 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 edged higher from US$2,099 per tonne on Monday, July 24, to US$2,128 per tonne on Tuesday, July 25.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,410 per tonne on Monday, July 24, and fell to RMB 14,375 per tonne. Later, the contract rallied to RMB 14,465 per tonne before ending at RMB 14,445 per tonne. SMM predicts that SHFE 1709 aluminium will move at the highs of RMB 14,360-14,490 per tonne, with a strong resistance at RMB 14,500 per tonne.

Spot aluminium in east China market is expected to trade at discounts of RMB 150-110 per tonne over SHFE 1708 aluminium on Tuesday.

The market focus will be manufacturing PMI from UK July IFO industrial orders, US May FHFA home price index, and US July Conference Board’s consumer confidence index on Tuesday, SMM said.

MCX Aluminium Price Trend

The aluminium futures contract on India’s Multi Commodity Exchange is moving in a narrow range between INR121.45 per kg and INR 123.5 per kg. The contract is likely to remain range-bound though the immediate outlook is not clear.