LME aluminium rises but likely to retest support at US$1,918/t

LME aluminium seems to have lost its bullish momentum after facing a strong barrier at US$1,933 per tonne. The light metal contract though settled higher at US$1,913 per tonne on Wednesday, July 6, up from its previous close of US$1,903.50 per tonne on Tuesday, July 5, is expected to retest a support at US$1,918 per tonne. Reuters’ technical analysis says- if LME aluminium breaks below this support, it could cause a loss to the next support at US$1,903 per tonne.

Shanghai Metals Market forecasts that LME aluminium will range at US$1,915-1,935 per tonne on Thursday, July 6.

As on July 5, LME official cash buyer aluminium price stands at US$1,912.50 per tonne, cash seller & settlement aluminium price is US$1,913 per tonne, 3M buyer price is US$1,918 per tonne, 3M seller price is US$1,919 per tonne, Dec1 buyer price is US$1,952 per tonne, and Dec1 seller price is US$1,957 per tonne. The current LME official Opening Stock of aluminium is estimated at 1397375 tonnes, total Live Warrant is 1069050 tonnes, and Cancelled Warrant is 328325 tonnes.

LME aluminium premiums remain unchanged across major markets worldwide. As on July 4, 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) is hovering near US$2,050 per tonne. On Thursday, July 6, it stands at US$2,054 per tonne, slightly down from yesterday’s benchmark price of US$2,056 per tonne.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,225 per tonne on Wednesday, July 5, and then fell to RMB 14,180 per tonne. Later, the contract hit a 2-month high of RMB 14,300 per tonne before closing at RMB 14,265 per tonne. SMM predicts that SHFE 1709 aluminium will meet strong resistance at RMB 14,300 per tonne and move in the range of RMB 14,100-14,360 per tonne on Thursday, July 6.

Spot aluminium in east China market is expected to trade at discounts of RMB 140-100 per tonne over SHFE 1707 aluminium contract on Thursday.

The market focus will be on the crude oil stocks, US ADP employment in June and last week’s initial jobless claims on Thursday, SMM said.