LME aluminium gains on sustained demand; fundaments weak for SHFE aluminium

LME aluminium traded higher by 0.9 per cent at US$2,233 per tonne on Monday, January 15, as demand remained high. The light metal contract later came down to close at US$2,227.50 per tonne, still higher than previous week’s close at US$2,215 per tonne. Shanghai Metals Market forecasts that LME aluminium will trade higher in the range of US$2,220-2,250 per tonne on Tuesday, January 16 supported by positive fundamentals.

As on January 15, LME official cash buyer aluminium price (Bid Price) stands at US$2,227 per tonne, cash seller & settlement aluminium price (Offer price) is US$2,227.50 per tonne, 3M Bid Price is US$2,231 per tonne, 3M Offer Price is US$2,231.50 per tonne, Dec1 Bid Price is US$2,2295 per tonne, and Dec1 Offer Price is US$2,300 per tonne. LME aluminium opening stock stands at 1084450 tonnes, total Live Warrants is 836175 tonnes and Cancelled Warrants 248275 tonnes.

The Asian reference price for LME aluminium (3-months ABR) is US$2,236.30 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange has dropped from US$2,323 per tonne on January 15 to US$2,286 per tonne on January 16.

On Shanghai Futures Exchange, SHFE aluminium price movement on January 15, as updated by Shanghai Metals Market, was as follows:

SHFE aluminium has limited upward headspace as fundamentals are getting weaker. Downstream purchasing has slowed down in the domestic market while newly-increased capacity has come online.  

SMM thinks the most active SHFE aluminium contract will trade at US$2328.94-2355.37 per tonne (RMB 14,980-15,150 per tonne) range on Tuesday, January 16, with strong support of the 20-day moving average.

In the spot aluminium market, discounts are expected to move at RMB 200-160 per tonne today.