LME aluminium softens as trading sentiment turns light prior to Chinese New Year holiday

LME aluminium has eased out after rising to record highs on Tuesday, January 24. The contract closed at US$1,838 per tonne, down 0.59 per cent from the previous day's closing of US$1,849 per tonne. As per Shanghai Metals Market's earlier prediction, the contract is likely to hover in the range of US$1,810-1,840 per tonne in the short term.

As on January 26, LME official cash buyer price of aluminium stands at US$1,837 per tonne, cash seller & settlement price is US$1,837.5 per tonne, 3M buyer price is US$1,838 per tonne, 3M seller price is US$1,840 per tonne, Dec1 buyer price is US$1,870 per tonne, and Dec1 seller price is US$1,875 per tonne. The current LME official Opening Stock of aluminium is estimated at 2290075 tonnes, total Live Warrants is 1634200 tonnes, and Cancelled Warrant is 648175 tonnes.

In China, the benchmark price of aluminium on Shanghai Metal Price Index (SHMETX) stands at RMB 13,350 on Thursday, January 26. The average Shanghai Bonded Warehouse Premium is US$ 110 per tonne.

Shanghai Futures Exchange (SHFE) announced suspension of night trading on January 26 on account of the Chinese New Year holiday. Trading will be resumed on the bourse on February 3.

SHFE also adjusted the trading margins of the contracts along with the daily limits. Trading margin for aluminium, SHFE said, will be increased from 9 per cent to 11 per cent, and its daily limit will be raised from 7 per cent to 8 per cent.

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Trading sentiment is expected to remain light on the SHFE as investors in China major markets have already started leaving for the 2017 New Year holiday.

“The 2017 Chinese New Year holiday Friday is around the corner, and Friday will be the last trading day in China before the holiday. Investors will exit the market for the upcoming holiday, and Shanghai prices will hold largely stable amid light trading sentiment,” SMM predicted.