Aluminium prices come under pressure from a strong U.S. dollar

LME aluminium gave up its gains and dropped for two consecutive days last week as the U.S. dollar firmed up. The contract which had risen to hit the 25-week highest at US$1,900 per tonne on February 14 came down 1.81 per cent to close at US$1,865.50 per tonne on Friday after night trading. Shanghai Metals Market (SMM) said in its forecast that LME aluminium will test support at the 10-day moving average and will move in the range of US$1,865-1,895 per tonne on Monday, February 20.

As on February 17, LME official cash buyer price of aluminium stands at US$1,865 per tonne, cash seller & settlement price is US$1,865.5 per tonne, 3M buyer price is US$1,878 per tonne, 3M seller price is US$1,879 per tonne, Dec1 buyer price is US$1,923 per tonne, and Dec1 seller price is US$1,928 per tonne. The current LME official Opening Stock of aluminium is estimated at 2208050 tonnes, total Live Warrants is 1572950 tonnes, and Cancelled Warrant is 629400 tonnes.

In China, the benchmark price of aluminium on Shanghai Metal Exchange (SME) stands at US$2,015 per tonne on Monday, down 1.08 per cent from Friday's price of US$2,037 per tonne.

Aluminium contract traded on Shanghai Futures Exchange (SHFE) - SHFE 1704 aluminum opened at RMB 14,345 per tonne and then dropped sharply closing at RMB 14,065 per tonne on Friday. SMM predicts the contract will drop further will move at RMB 13,850-14,100 per tonne range on on Monday.

Spot aluminium in China's domestic market is expected to trade at discounts of RMB 200-180 per tonne on Monday.

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Base metal prices including that of aluminium are expected to come under pressure from a strengthening dollar. "The dollar is estimated to lurch higher, and this will weigh on base metals, and Shanghai prices are expected to keep diverging," SMM predicts.

In China, market participants will watch out for strike negotiations at mines, new pollution control activities and downstream aluminium purchases, SMM adds.