LME aluminium heads south as dollar index rises; reversal on the cards

LME aluminium ended the last week in a drop falling 1.38 per cent from its previous close of US$1,956 per tonne on Thursday, April 6 to US$1,929.50 per tonne on Friday, April 7. The US dollar index which was hit slightly by Syria strike effect rose late Friday extending its weekly gains. The rising greenback put downward pressure on the base metals. This week, LME aluminium price is expected to stage a reversal and hover at highs in the range of US$1,950-1,980 per tonne, analyses Shanghai Metals Market (SMM).

Reuters says LME aluminium is biased to approach a resistance at $1,970 per tonne, as suggested by its wave pattern and a Fibonacci projection analysis.

As on April 7, LME official cash buyer price of aluminium stands at US$1,929 per tonne, cash seller & settlement price is US$1,929.50 per tonne, 3M buyer price is US$1,942 per tonne, 3M seller price is US$1,944 per tonne, Dec1 buyer price is US$1,980 per tonne, and Dec1 seller price is US$1985 per tonne. The current LME official Opening Stock of aluminium is estimated at 1818300 tonnes, total Live Warrants is 987050 tonnes, and Cancelled Warrant is 831250 tonnes.

LME aluminium premiums remain unchanged across major global markets last weel. LME Aluminium US Premium stands at US$215, LME Aluminium West-Europe Premium stands at US$95, LME Aluminium East-Asia Premium is US$105 and LME Aluminium South-East Asia Premium is US$15 (per tonne) as on April 5.

{googleAdsense}

The benchmark aluminium price on Shanghai Metal Exchange (SME) also declined marginally on Friday. As on April 10, it stands at US$2,000 per tonne, down 0.19 per cent from its previous benchmark price of US$2,000 per tonne on April 7.

May aluminium contract traded on the Shanghai Futures Exchange (SHFE) dropped by 0.8 per cent on Friday. After opening at RMB 13,975 per tonne, the contract faced strong resistance, and closed the day at RMB 14,005 per tonne. SMM predicts, price of SHFE aluminium will rise high this week and fluctuate within RMB 14,000-14,280 per tonne on Monday.

Spot aluminium in China's domestic market is projected to trade at discounts of RMB 160-120 per tonne on Monday.

The data calendar on Monday, April 10, features the release of China’s informal financing in March, M2 supply and new RMB loans in March and US March LMCI. The entire base metals basket is expected to consolidate at lows todays barring a few exceptions.