LME Aluminium to be range-bound at US$1,710-1,745/mt, but 'trading will be caution' says SMM

LME Aluminium is edging higher. After the Organization of Petroleum Exporting (OPEC) Countries reached a consensus to cut production by 1.2 million barrels a day starting in January 2017, yesterday, the metal investors took a cue and moved money into the commodity markets making industrial metals rise across the board. Crude being a key asset and the main benchmark for energy prices is expected to keep the prices of the metals buoyed at least for the short term. Higher energy prices signify higher logistics cost and higher cost of production, especially for energy-intensive metals like aluminium.

LME aluminium closed at US$1,724/mt, up 0.11% from the previous day closing of US$1,722/mt. The contract is expected to fluctuate between US$1,710-1,745/mt on Friday, December 2, says Shanghai Metals Market.

LME official opening stocks of aluminium, as on December 1, stands at 2149150mt, Live Warrants are recorded at 1386225mt and Cancelled Warrants are estimated at 758625mt.

In China, aluminium traded on Shanghai Metal Exchange opened at US$2,035 on Friday, up 0.64% from yesterday's opening at US$2,022/mt.

Base metal prices on the Shanghai Futures Exchange are expected to trade cautiously during Asian trading hours on Friday, SMM foresees. SHFE 1702 aluminum will keep ranging at RMB13,200-13,500/mt on Friday with resistance at the 10 and 20-day moving averages and support at the 40-day moving average.

Aluminium premium in China’s spot market should trade at RMB20-60/mt on Friday, predicts SMM.

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SMM puts a note of caution for the domestic aluminium traders saying, “The US is going to release its non-farm payrolls, and trading will be caution before the result.”

If the US non-farm employment data turns out to be upbeat, base metals including aluminium will be bolstered, but it is unlikely that commodities priced in USD will rebound, opine market watchers.