LME aluminium dips as the US dollar surges overnight

LME aluminium prices dipped 0.67 per cent to trade at US$1,765/mt on Monday, November 14, weighed on by a strong US dollar index which broke through 100 with high expectation of the US interest rate hike in December’s Fed meeting. LME Official Cash Buyer price for the metal stands at US$ 1,776.50/mt and 3-months Buyer price stands at US$ 1778/mt.

According to Shanghai Metals Market forecast, LME aluminium will test support at the 5-day moving average and swing between USD 1,720-1,760/mt. Other base metals are also expected to diverge today.



In China, aluminium traded on Shanghai Metal Exchange closed at US$ 2,245/mt after Monday's night trading. The contract opened at US$ 2,210/mt on Tuesday, November 15.

Chinese yuan depreciated in a row, supporting aluminium traded on Shanghai Futures Exchange. SHFE 1701 aluminium is expected to hover at RMB 14,100-14,400/mt with resistance on Tuesday, says SMM.

On Monday, SHFE 1701 aluminium opened at RMB 13,900/mt and then rebounded to around RMB 14,230/mt before stabilizing. During the afternoon trading, SHFE 1701 aluminium fell to RMB 14,080/mt, hurt by short selling, but later rallied again to RMB 14,375/mt. The contract finally ended at RMB 14,330/mt. Trading volumes increased 352,000 to 793,962 lots and positions fell 6,540 to 222,388. Trading volumes of all SHFE aluminium contracts increased to 1.27 million lots.

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SHFE 1701 aluminium will be sensitive to rise with lack of sufficient liquidity, falling Chinese yuan, expectation of inflation and insufficient of asset allocation. However, supply will increase with easing of transportation conditions in Xinjiang. So, market should eye on a possible decline of SHFE 1701 aluminium.

In China’s domestic market, spot aluminium should trade at discounts of RMB 20/mt to premiums of RMB 20/mt on Tuesday, predicts SMM.