A strong dollar weighs down LME aluminium; may rise on falling inventories

LME aluminium dropped from its current highs as September U.S. Dollar index futures rallied on Monday, October 16 after a key Federal Reserve Index of business conditions rose to  a three-year high. The light metal contract closed at US$2,111 per tonne after night trading yesterday, down from US$2,144 per tonne on Monday. As predicted earlier, it broke below a support level at US$2,130 per tonne, which caused the loss.

Shanghai Metals Market predicts that LME aluminium will regain some strength due to falling inventories and move within the range ofUS$2,140-2,155 per tonne on Wednesday, October 18.

As on October 17, LME official cash buyer aluminium price (Bid Price) stands at US$2,110.50 per tonne, cash seller & settlement aluminium price (Offer price) is US$2,111 per tonne, 3M Bid Price is US$2,135.50 per tonne, 3M Offer Price is US$2,136 per tonne, Dec1 Bid Price is US$2,182 per tonne, and Dec1 Offer Price is US$2,187 per tonne. LME aluminium Opening Stock or the LME aluminium inventory level stands at 1212225 tonnes, total Live Warrants is 969400 tonnes, and Cancelled Warrant is 242825 tonnes.                              

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange has come down from US$2,431 per tonne on October 17, to US$2,423 per tonne on October 18.

On Tuesday’s night trading, a strong US dollar and market caution ahead of China’s 19th National Congress of the Communist Party of China weighed down most of the base metals on Shanghai Futures Exchange. The most active contract SHFE 1712 aluminium is likely to range at RMB 16,150-16,400 per tonne on Wednesday, October 18, SMM forecasts.

In China’s spot aluminium market, the spot discounts are expected to range at RMB 200-160 per tonne on Wednesday, SMM said.