LME aluminium drops further unable to draw support from a weak dollar

LME aluminium failed to hold highs and dropped below US$1,900 even though the dollar index, which measures the U.S. dollar against a basket of six major currencies, moved lower at 95.660. The light metal contract closed at US$1,879 per tonne after night trading on Tuesday, July 11, down 1.8 per cent from its previous close of US$1,914 per tonne on Monday, July 10.

Shanghai Metals Market observes that LME aluminium will trade in the range of US$1,885-1,905 per tonne on Wednesday, July 12.

As on July 7, LME official cash buyer aluminium price stands at US$1,978 per tonne, cash seller & settlement aluminium price is US$1,879 per tonne, 3M buyer price is US$1,891 per tonne, 3M seller price is US$1,891.50 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 1377750 tonnes, total Live Warrant is 1063550 tonnes, and Cancelled Warrant is 314200 tonnes.

LME aluminium premiums remain unchanged across major markets worldwide. As on July 10, LME aluminium premium for the US stands at US$180, LME Aluminium West-Europe Premium stands at US$80, LME Aluminium East-Asia Premium is US$105, and LME Aluminium South-East Asia Premium is US$15 (per tonne).

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The benchmark aluminium price at Shanghai Metal Exchange (SME) has edged slightly higher at US$2,058 per tonne on Wednesday, July 12, up 1.3 per cent from Tuesday’s benchmark price of US$2,031 per tonne.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,105 per tonne on Tuesday, July 11, and then dropped to RMB 14,005 per tonne. Later, the contract jumped on the news of 1.1 million tonne smelter capacity cut at one aluminium project and closed at RMB 14,195 per tonne. SMM predicts that the market will digest the smelter capacity cut news and SHFE 1709 aluminium will come down to fluctuate at RMB 14,150-14,320 per tonne on Wednesday, July 12.

Spot aluminium in China domestic market is expected to trade at discounts of RMB 110-70 per tonne over SHFE 1707 aluminium contract on Wednesday.

The market focus will be on the US’s EIA and API crude oil inventory from the week ending July 7, UK’s June unemployment data and eurozone’s industrial production on Wednesday, SMM stated.