LME aluminium closed lower on Thursday but regained overnight; SHFE to find support at the five-day moving average

The US dollar increased against the euro, which was dragged lower by weak economic data, while the pound gained on hopes of a second Brexit referendum. Base metals ended mixed and LME aluminium gained 0.57%. SHFE aluminium edged down.  

After closing Thursday’s trading lower at US$ 1804 per tonne, LME aluminium traded rangebound and continued upward overnight. The contract rose to hit the 20-day moving average, or US$1,856 per tonne, buoyed by higher prices of crude oil. It settled around the 10-day moving average at US$1,852 per tonne. It is likely to trade at US$1,840-1,865 per tonne today.

As on January 17, LME aluminium cash (bid) price stood at US$ 1803 per tonne, LME official settlement price stands at US$ 1804 per tonne; 3-months bid price stands at US$ 1827 per tonne, 3-months offer price is US$ 1828 per tonne; Dec 19 bid price stands at US$ 1970 per tonne, and Dec 19 offer price stands at US$ 1975 per tonne.  

The LME aluminium opening stock increased to 1304000 tonnes. Live Warrants totalled at 1057150 tonnes, and Cancelled Warrants were 246850 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1845 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange dropped to US$ 1967 per tonne today from US$ 1972 per tonne on January 17.

As shorts added over 2,000 lots, the SHFE 1903 contract fell to a low of RMB 13,350 per tonne yesterday after opening. This prompted longs to add and shorts to cut bets, allowing the contract to recover the losses to end the trading day 0.3% higher at RMB 13,395 per tonne. With weak fundamentals, we remain cautious about SHFE aluminium. The SHFE 1902 contract found support at the five-day moving average, and slowed declines to close at RMB 13,375 per tonne. We see it trading at RMB13,350-13,450  per tonne today with spot discounts at RMB 70-30 per tonne.