LME aluminium plateaus but a strong dollar likely to weigh on base metals

Aluminium prices on London Metal Exchange remained unchanged at US$1,878 per tonne on Tuesday, though the U.S. dollar strengthened signalling at a possible downward correction in the near term. Crude prices also fell on Wednesday as American crude supplies climbed 9.53 million barrels to reach their highest at 518.1 million. Shanghai Metals Market (SMM) said in its forecast that the contract will fluctuate between the 5 and 10-day moving averages and trade at US$1,875-1,900 per tonne on Wednesday, February 22.

As on February 21, LME official cash buyer price of aluminium stands at US$1,877.5 per tonne, cash seller & settlement price is US$1,878 per tonne, 3M buyer price is US$1,889.50 per tonne, 3M seller price is US$1,890 per tonne, Dec1 buyer price is US$1,935 per tonne, and Dec1 seller price is US$1,940 per tonne. The current LME official Opening Stock of aluminium is estimated at 2195375 tonnes, total Live Warrants is 1532575 tonnes, and Cancelled Warrant is 662800 tonnes.

In China, the benchmark price of aluminium on Shanghai Metal Exchange (SME) has dropped down by 0.84 per cent from its previous benchmark price of US$2,020 per tonne on Tuesday to stand at US$2,003 per tonne on Wednesday, February 22.

Base metal prices including aluminium prices dropped overnight on Shanghai Futures Exchange (SHFE). With dollar index scaling higher, further decline in prices can be expected. According to SMM forecast, SHFE 1704 aluminum is likely to move between RMB 14,150-14,350 per tonne on Wednesday.

Spot aluminium in China's domestic market is expected to trade at discounts of RMB 280-240 per tonne on Wednesday.

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China reported 2.5 per cent increase in the output of ten key non-ferrous metals totalling 52.83 million in tonnes in 2016. Output of primary aluminium reached 31.87 million tonnes, up 1.3 per cent year-on-year.

Aluminum Corp of China (Chalco) has predicted a significant price rise for aluminium in 2017. Higher exports of the commodity in the month of January is mainly said to make the price buoy up.