LME aluminium feels strain of falling crude oil prices; short-term uptrend to resume

The continuous rise in LME aluminium prices came to a halt as the falling crude oil prices in Asia weighed on the lightmetal contract traded globally. Aluminium prices on the bourse dropped 0.41 per cent from its previous close of US$1,918 per tonne on Tuesday, March 21 to US$1,1910 per tonne on Wednesday, March 22. Reuters' technical analysis infers LME aluminium is neutral in a range of US$1,916-US$1,937 per tonne, and an escape could suggest a direction. According to Shanghai Metals Market forecast, the effect of crude oil prices on aluminium will be only marginal and the contract will keep moving higher in the short term. LME aluminium is expected to move at US$1,910-1,940 per tonne on Thursday, March 23.

As on March 22, LME official cash buyer price of aluminium stands at US$1,908 per tonne, cash seller & settlement price is US$1,910 per tonne, 3M buyer price is US$1,921 per tonne, 3M seller price is US$1,921.50 per tonne, Dec1 buyer price is US$1,955 per tonne, and Dec1 seller price is US$1,960 per tonne. The current LME official Opening Stock of aluminium is estimated at 1964600 tonnes, total Live Warrants is 1069375 tonnes, and Cancelled Warrant is 895225 tonnes.

As on March 21, LME Aluminium US Premium remains unchanged at US$215, LME Aluminium West-Europe Premium stands at US$95, LME Aluminium East-Asia Premium is US$100 and LME Aluminium South-East Asia Premium is US$15 (per tonne).

The benchmark price of aluminium on Shanghai Metal Exchange (SME) seems to be unaffected by the crude oil price volatility. It stands at US$1,970 per tonne on Thursday, March 23, up 0.35 per cent from US$1,963 per cent on Wednesday, March 22.

SHFE 1705 aluminium traded on Shanghai Futures Exchange (SHFE) opened at RMB 13,830 per tonne on Wednesday and then after fluctuating for a while ended at RMB 13,805 per tonne. The contract was fairly resistant to drop unlike other base metals on the bourse. SMM says SHFE 1705 aluminium will move between RMB 13,650-13,900 per tonne on Thursday.

Spot aluminium in China's domestic market should trade at discounts of RMB 180-140 per tonne on Thursday, forecasts SMM.

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The economic data calendar on Thursday features the release of US February new home sales, the number of initial jobless claims, eurozone March CCI and Gfk’S April CCI for Germany. Market participants will be keeping an eye out for these data plus Fed Chair Janet Yellen’s statement though the last one is expected to give out limited valuable information, thinks SMM.

The 12th Shanghai Copper & Aluminum Summit 2017, organized by SMM and Shanghai Nonferrous Metals Association, is starting on March 23-24, 2017. The Summit will focus on price outlook, market insights, and a number of other important industry issues.