LME aluminium down 2.1% as US dollar strengthens, SHFE volatility to continue

LME aluminium has again set out for a journey downslope the price graph. With the US dollar index strengthening, market sentiment got depressed, and LME official cash buyer price of aluminium slid from US$1,765/mt on Monday to US$1,725/mt on Wednesday, November 16. After Tuesday's night trading, the metal closed at US$1,727/mt. LME aluminium will test the 20-day moving average and move between US$1,705-1,740/mt, says Shanghai Metals Market forecast.

As per data recorded on November 14, LME Aluminium US Premium stands at US$155, LME Aluminium West-Europe Premium is at US$80, LME Aluminium East-Asia Premium is at US$65, and LME Aluminium South-East Asia Premium is at US$15.

The current LME Official opening stock of aluminium is estimated at 2160475 tonnes.




In China, aluminium traded on Shanghai Metal Exchange, opened at US$2,131/mt on Wednesday, down 3.57 per cent from Tuesday's US$2210/mt.

Base metal prices on Shanghai Futures Exchange are also expected to be volatile on Wednesday, SMM foresees. On Tuesday, SHFE 1701 aluminium started at RMB 14,180/mt and then increased before fluctuating, up to as high as RMB 14,395/mt. During the afternoon trading, SHFE 1701 aluminium fell below RMB 14,000/mt to RMB 13,725/mt. The contract finally ended at RMB 13,800/mt. The contract is expected to test support at the 10-day moving average and move at RMB 13,700-14,000/mt on Wednesday. Spot aluminium should trade at premiums of RMB 480-520/mt on Wednesday, says SMM.

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China aluminium stock update:

As per SMM data, aluminium stocks in China's five major domestic markets reached 2016’s high at 928,000 tonnes in March, but tumbled to record low of 241,000 tonnes in early August, although inventories rebounded slightly for some time afterwards. China’s aluminium market started a round of destocking in 2016 amid the country’s ongoing supply side reform, which had big impact on market supply. Will low stocks continue into 2017.

“Aluminium stocks in China will grow quickly in 2017 due to restarted and new capacity,” said SMM senior aluminium analyst Liu Xiaolei at the SMM Summit 2016, held in Shanghai from November 10-11.

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