LME aluminium hits 2-1/2 year peak, SHFE aluminium rallies in tandem

Taking the cue from the Chinese Weiqiao Group’s rumoured announcement of higher than expected capacity cuts, LME aluminium surged above US$2,000 per tonne on Tuesday, August 8. The rise marked two-and-a-half year peak for the light metal which ended the trading day at US$1,981 per tonne yesterday after hitting US$2,030 per tonne. Its earlier close was at US$1,920 per tonne on Monday, August 7.

News has it that Shandong province in China has ordered 3.21 million tonnes of smelting capacity to be shut, as Beijing ups the ante for its pollution control activities for every industry.

According to Shanghai Metals Market forecast, LME aluminium will climb further higher into the range of US$2,015-2,035 per tonne on Wednesday, August 9.

As on August 8, LME official cash buyer aluminium price (Bid Price) stands at US$1,980 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,981 per tonne, 3M Bid Price is US$1,992 per tonne, 3M Offer Price is US$1,992.50 per tonne, Dec1 Bid Price is US$2,035 per tonne, and Dec1 Offer Price is US$2,040 per tonne. LME aluminium Opening Stock stands at 1313200 tonnes, total Live Warrants is 1038500 tonnes, and Cancelled Warrant is 274700 tonnes.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price at Shanghai Metal Exchange (SME) has shot to US$2,353 per tonne on Wednesday, August 9, from US$2,261 on Tuesday, August 8.  

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1710 opened at RMB 15,420 per tonne on Tuesday, and then rose to RMB 15,620 per tonne. The upward momentum in SHFE 1710 aluminium was, however, a bit limited. SMM predicts that aluminium prices will, in most likelihood, correct down in the foreseeable future; but on Wednesday, August 9, SHFE 1710 aluminium will range at RMB 16,100-16,250 per tonne.

Spot aluminium in east China market is expected to trade at discounts of RMB 200-160 per tonne over SHFE 1708 aluminium on Wednesday.

The market focus will be on US oil inventories, China’s annualized July CPI, PPI, M2 supply and US June wholesale inventories on Wednesday, SMM said.