LME aluminium plunged to a two years low yesterday; SHFE likely to strengthen up in the short term

The US dollar inched up on Wednesday as investors turned to safe havens on growing concerns about the weak global economy after New Zealand’s central bank cut interest rates by more than expected. LME base metals closed mixed on Wednesday. LME aluminium shed 0.2% and SHFE aluminium lost 0.3%.

LME aluminium plunged to the lowest in two years yesterday. With a strong US dollar, three-month LME aluminium extended its decline to a low of US$1,745.5 per tonne on Wednesday, near a 2-1/2-year low of US$1,745 per tonne plumbed on June 17. It later clawed back some losses to finish its trading day 0.17% lower at US$1,759 per tonne. LME aluminium is expected to trade between US$1,700-1,800 per tonne today.

As on August 7, Wednesday, LME aluminium cash (bid) price stood at US$ 1727.50 per tonne, LME official settlement price stands at US$ 1728 per tonne; 3-months bid price stands at US$ 1756 per tonne, 3-months offer price is US$ 1756.50 per tonne; Dec 20 bid price stands at US$ 1857 per tonne, and Dec 20 offer price stands at US$ 1862 per tonne.

The LME aluminium opening stock dropped yesterday to 1009925 tonnes. Live Warrants totalled at 735575 tonnes, and Cancelled Warrants were 274350 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1759 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange (SME) dropped to US$ 1962 per tonne today from US$ 1967 per tonne on Wednesday.

The unwinding of short positions helped the most traded SHFE September contract recover from a lower open overnight, which ended 0.32% lower at RMB 13,810 per tonne. SMM retains its forecasts that SHFE aluminium will strengthen in seesaw trade in August-September as demand will pick up earlier than the commissioning of new capacity. SHFE aluminium is expected to trade between RMB 13,800-13,900 per tonne today, with spot premiums of RMB 10-50 per tonne.