LME aluminium plunges, may test support at US$1,891

The price rally in LME aluminium came to a halt as the light metal surrendered all its July gains and closed at US$1,914 per tonne on Monday, July 10. The drop by 0.31 per cent from its previous close of US$1,920 per tonne on Friday, July 7, is indicative of the fact that LME aluminium is nearing a correction. According to Shanghai Metals Market projections, the contract will range at US$1,888-1,911 per tonne on Tuesday, July 11.

Reuters’ technical analysis suggests that LME aluminium may test a support at US$1,891 per tonne, a break below which could take the metal down to the next support at US$1,877.

As on July 7, LME official cash buyer aluminium price stands at US$1,913.50 per tonne, cash seller & settlement aluminium price is US$1,914 per tonne, 3M buyer price is US$1,922.50 per tonne, 3M seller price is US$1,923 per tonne, Dec1 buyer price is US$1,955 per tonne, and Dec1 seller price is US$1,960 per tonne. The current LME official Opening Stock of aluminium is estimated at 1383025 tonnes, total Live Warrant is 1064950 tonnes, and Cancelled Warrant is 318075 tonnes.

LME aluminium premiums remain unchanged across major markets worldwide. As on July 7, LME aluminium premium for the US stands at US$180, LME Aluminium West-Europe Premium stands at US$80, LME Aluminium East-Asia Premium is US$105, and LME Aluminium South-East Asia Premium is US$15 (per tonne).

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The benchmark aluminium price at Shanghai Metal Exchange (SME) has fallen by 0.97 per cent. It stands at US$2,031 per tonne on Tuesday, July 11, down from Monday’s benchmark price of US$2,051 per tonne.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,180 per tonne on Monday, July 10, and then climbed to RMB 14,245 per tonne with the longs opening position. Later, the contract dropped to settle at RMB 14,140 per tonne. SMM predicts that SHFE 1709 aluminium will keep falling on Tuesday, July 11, and range between RMB 14,000-14,150 per tonne.

Spot aluminium in east China market is expected to trade at discounts of RMB 130-90 per tonne over SHFE 1707 aluminium contract on Tuesday.

The market focus will be on final reading of US’s monthly wholesale inventory in May, EIA monthly report and Federal Reserve official Lael Brainard’s speech on Tuesday, SMM stated.