LME aluminium rebounded with dollar's fall; SHFE to test support at five-day moving average

The US dollar on Monday fell from an 18-month high, ahead of the Federal Reserve's policy meeting this week. LME base metals traded mixed on Monday and aluminium advanced close to 0.6%. SHFE base metals gained overnight with aluminium inching up some 0.1%.

LME aluminium rebounded from a low of US$1,920 per tonne and closed at US$1,936 per tonne on Monday night. We see limited upside room for LME aluminium which is likely to trade at US$1,925-1,945 per tonne today.

As on December 17, Monday, LME aluminium cash (bid) price stood at US$ 1937per tonne, LME official settlement price stands at US$ 1937.50 per tonne; 3-months bid price stands at US$ 1924 per tonne, 3-months offer price is US$ 1925 per tonne; Dec 19 bid price stands at US$ 1980 per tonne, and Dec 19 offer price stands at US$ 1985 per tonne.  

The LME aluminium opening stock increased to 1169625 tonnes. Live Warrants totalled at 958550 tonnes, and Cancelled Warrants were 211075 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1927 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange increased to US$ 1979 per tonne today from US$ 1963 per tonne on December 17.

The SHFE 1902 contract successfully tested support at the five-day moving average. The contract closed at RMB 13,650 per tonne with open interest up 2,552 lots to 235,000 lots. Pressure above came from the 10- and 20-day moving averages. The contract then jumped to close at a high of RMB 13,760 per tonne overnight as investors flowed to the 1902 contract after the 1812 contract expired. With a smaller decline in social inventories and continued sluggish consumption, the SHFE 1902 contract is expected to trade at RMB 13,600-13,720 per tonne today with spot discounts at RMB 80-40 per tonne. The contract is expected to test support at the five-day moving average.