LME aluminium shows resilience in September

<p>The London Metal Exchange cash and three-month aluminium contracts are showing sign of improvement in the month of September. LME 3M contracts closed at $1,664 per metric ton on September 27 while LME cash contracts closed at $1,648 per metric ton. The graph shows significant gains in the month of September.<br /><br />Three months aluminium has gained 10.2% so far since the beginning of 2016. In the month of September itself it recorded a 2.9% increase. Aluminium prices have shown resilience this year. However, aluminium prices are moving within a range of $1,600 to $1,700 per metric ton.<br /><br /><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/lme%203M.jpg" alt="News" width="480" height="420" />At the beginning of the year, aluminium&rsquo;s sentiment was negative. Global aluminium markets were under the overhang of a decade of surplus. All major aluminium producers ex-China started cutting unprofitable capacity to give support to LME prices and premiums and to survive the volatile market. The US especially has closed down a large portion of its primary capacity. The current capacity of the US domestic primary aluminium industry is less than 25% of the original capacity. While the world was in a deficit for a while, higher Chinese production and the resulting exports continued to keep the market into a surplus.<br /><br />{googleAdsense}<br /><br />Fortunately, Chinese aluminium exports have started falling in 2016. China&rsquo;s total aluminium exports have fallen 4% year-over-year in the first eight months of 2016. However, Chinese aluminium exports have risen on a month-over-month basis for two consecutive months. <br /><br />Market experts are concerned that Chinese producers may resume a number of idled capacities if the LME price bounces back. This might again put the market back to surplus.&nbsp; However, the Fed&rsquo;s decision to hold the benchmark rates steady was received well in the metal market including aluminium. This is one reason for the LME price to show resilience currently. <br /><br /></p>