An expected rise in US dollar index puts a lid on LME aluminium price gains

LME aluminium remained almost unchanged over the weekend as dollar showed signs of reversal from its current lows. The light metal contract rose marginally from US$2,237.5 per tonne on Thursday, January 25 to close at US$2,238 per tonne on Friday, January 26. With the US dollar still staying in the negative territory after US GDP data release, commodity market is expected to see extended volatility in the near term.

Shanghai Metals Market (SMM) forecasts that LME aluminium will trade in the range of US$2,230-2,270 per tonne on Monday, January 29. The support from the five-day and 10-day moving averages is likely to remain weak.

As on January 26, LME official cash buyer aluminium price (Bid Price) stands at US$2,237 per tonne, cash seller & settlement aluminium price (Offer price) is US$2,238 per tonne, 3M Bid Price is US$2,240 per tonne, 3M Offer Price is US$2,240.50 per tonne, Dec1 Bid Price is US$2,288 per tonne, and Dec1 Offer Price is US$2,293 per tonne. LME aluminium opening stock stands at 1081425 tonnes, total Live Warrants is 840000 tonnes and Cancelled Warrants 241425 tonnes.

The Asian reference price for LME aluminium (3-months ABR) is US$2,230 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange has risen from US$2,289 per tonne on January 26 to US$2,296 per tonne on January 29.

On Shanghai Futures Exchange, aluminium contracts traded low as inventory levels rose creating continued pressure in the physical market. The movement of SHFE aluminium on January 26, as updated by SMM is as follows:

SMM analysis suggests that a lower SHFE:LME price ratio may lend some support to SHFE aluminium prices. The contract is expected to stay range-bound moving within RMB 14,550-14,750 per tonne today.

In the spot aluminium market, discounts are expected to move at RMB 150-110 per tonne Monday, January 29.