LME aluminium drops to two-week low as stockpiles rise in China

Aluminium prices on London Metal Exchange hit a two-week low on Thursday, February 1, as worries grew stronger over rising stockpiles in China. Despite elaborate smelter capacity cuts Chinese market continues to remain in surplus, and this is likely to keep the lid on rising LME aluminium prices.

The light metal yesterday closed at US$2,218 per, down from US$2,224.50 per tonne on Wednesday, January 31. Shanghai Metals Market (SMM) foresees pressure at the five and 10-day moving averages for the contract. It says LME aluminium is likely to trade at US$2,210-2,240 per tonne range on Friday, February 2.

As on February 1, LME official cash buyer aluminium price (Bid Price) stands at US$2,217.50 per tonne, cash seller & settlement aluminium price (Offer price) is US$2,218 per tonne, 3M Bid Price is US$2,215 per tonne, 3M Offer Price is US$2,215.50 per tonne, Dec1 Bid Price is US$2,262 per tonne, and Dec1 Offer Price is US$2,267 per tonne. LME aluminium opening stock stands at 1080550 tonnes, total Live Warrants is 843375 tonnes, and Cancelled Warrants total at 237175 tonnes. LME aluminium Asian reference price three-months ABR is given asUS$2,208.06 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange has inched higher from US$2,254 per tonne on February 1 to US$2,263 per tonne on February 2.

On Shanghai Futures Exchange, the most active aluminium contract traded low on rising inventories.  The movement of SHFE aluminium on February 31, as updated by SMM is as follows:

SMM analysis suggests that SHFE aluminium may rebound after testing support at the five-day moving average and trade at RMB 14,250-14,450 per tonne on Friday, February 2.

In the spot aluminium market, discounts are expected to move at RMB 140-100 per tonne today.