LME aluminium may rise as dollar index falls to 13-month low

LME aluminium is on a moderate uptrend. With the dollar index hovering near the lowest since June 2016 following the Fed’s decision not to hike interest rate, the light metal is expected to gain in the short term. After night trading on Wednesday, July 26, LME aluminium closed at US$1,912 per tonne, up from the earlier close of US$1,896 per tonne on Tuesday, July 25.

Reuters’ technical analysis suggests that LME aluminium may retest a resistance at US$1,962 per tonne. There is a support at US$1,928 per tonne, a break below which could lead to a loss in the range of US$1,903-US$1,917 per tonne.

According to Shanghai Metals Market forecast, LME aluminium will rise to US$1,930-US$1,963 per tonne on Thursday, July 27.

As on July 26, LME official cash buyer aluminium price (Bid Price) stands at US$1,911.50 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,912 per tonne, 3M Bid Price is US$1,933 per tonne, 3M Offer Price is US$1,917.50 per tonne, Dec1 Bid Price is US$1,975 per tonne, and Dec1 Offer Price is US$1,980 per tonne. LME aluminium Opening Stock stands at 1372250 tonnes, total Live Warrants is 1079050 tonnes, and Cancelled Warrant is 293200 tonnes.

LME aluminium premiums remain unchanged across major regions globally. As on July 26 LME aluminium premium for the US stands at US$165, 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$2,114 per tonne on Wednesday, July 26, to US$2,111 per tonne on Thursday, July 27.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,600 per tonne on Wednesday, July 26, and then fell to RMB 14,515 per tonne. Later, the contract rallied to RMB 14,625 per tonne before ending down at RMB 14,510 per tonne. SMM predicts that SHFE 1709 aluminium will move at RMB 14,400-14,560 per tonne on Thursday, July 27.

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

The market focus will be on China Q2 GDP, last week’s US initial jobless claims, US CPI and retail sales, and US durable goods orders data on Thursday, SMM said.