LME aluminium to fluctuate at US$1,680-1,700 per tonne, SMM forecasts

As the London Metal Exchange market resumes business today, on January 3, the first trading day of 2017, aluminium traded on the board is expected to fluctuate between US$1,680-1,700 per tonne after the closing at US$1,685 per tonne last Friday.

Looking at the key macroeconomic indicators, regular data, including the US’s nonfarm payroll report and manufacturing PMIs, will be released on Tuesday. The market summary for 2016 will further lay the base for further trading to be conducted during the first week of the New Year. Shorts and longs are expected to invest cautiously, and base metals are expected to trade in a wide range this week, observes Shanghai Metals Market.

In China, the benchmark price of aluminium on Tuesday stood at US$1,839 per tonne, down 1.6 per cent from Friday's US$1,869 per tonne. Aluminium traded on Shanghai Futures Exchange- SHFE 1703 is also predicted to fluctuate "in search of a direction" at RMB 12,620-12,880 per tonne on Tuesday.

“Both longs and shorts will look for a direction during the first trading week of New Year, and so base metals are expected to trade in a wide range,” says SMM.

Spot aluminium in China’s domestic market should trade at premiums of RMB 100-140 per tonne on Tuesday, predicts SMM.

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According to market watchers, depreciation of the Chinese yuan will keep affecting market, though the market players are doubtful on the speed and range of the currency depreciation after it hit the year’s lowest level at 6.9725 in 2016. It is apprehended that if yuan moves below 7 in the first half of 2017, the market balance will be disturbed.

China’s Caixin manufacturing PMI and manufacturing PMIs from other countries in December will be introduced on Tuesday and Wednesday. The data thought to be stable will likely have a small effect on market.