LME aluminium edges higher but may retrace US$1,896/t

LME aluminium firms up slightly gaining support from a weaker dollar and rising crude oil prices on Monday, July 31. The light metal which closed at US$1,892 per tonne last Friday, July 28, settled at US$1,904 per tonne after yesterday’s night trading. However, the gain is likely to be limited within the range US$1,905-1,925 per tonne on Tuesday, August 1, as LME aluminium faces strong resistance at the moving averages, observes Shanghai Metals Market.

According to Reuters’ technical analysis, LME aluminium is biased to break a support at US$1,909 per tonne and retrace the next support level at US$1,896 per tonne in the short term. A break above US$1,909 per tonne in the upper trendline may take the light metal contract to US$1,926.50-1,938 per tonne during later trading hours on Tuesday, August 1.

As on July 31, LME official cash buyer aluminium price (Bid Price) stands at US$1,903 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,904 per tonne, 3M Bid Price is US$1,923.50 per tonne, 3M Offer Price is US$1,924 per tonne, Dec1 Bid Price is US$1,965 per tonne, and Dec1 Offer Price is US$1,970 per tonne. LME aluminium Opening Stock stands at 1354125 tonnes, total Live Warrants is 1046900 tonnes, and Cancelled Warrant is 307225 tonnes.

LME aluminium premiums remain unchanged across major regions globally. As on July 28, LME aluminium premium for the U.S. stands at US$165, LME Aluminium West-Europe Premium stands at US$80, LME Aluminium East Asia Premium remains unchanged at US$15, and LME Aluminium South-East Asia Premium is US$15 (per tonne).  

SME and SHFE Aluminium Price Trend

The benchmark aluminium price at Shanghai Metal Exchange (SME) has risen from US$2,112 per tonne on Monday, July 31, to US$2,118 per tonne on Tuesday, August 1.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium surged on positive news of Shandong Xinfa completing the closure of 530,000 tonnes of aluminium capacity. The contract ended higher at RMB 14,545 per tonne on Monday, July 31. SMM predicts that SHFE 1709 aluminium will range at RMB 14,380-14,500 per tonne on Tuesday, August 1.

Spot aluminium in east China market is expected to trade at discounts of RMB 160-120 per tonne over SHFE 1708 aluminium on Tuesday.

The market focus will be China’s Caixin manufacturing PMI in July, final reading of Eurozone’s Markit manufacturing PMI in July and annual GDP after seasonal adjustment and US’s core PCE prices in June and final reading of Markit manufacturing PMI in July on Tuesday, SMM said.