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28 NOVEMBER 2016 AL CIRCLE

LME aluminium to move in a tight range, base metals in China firm on Yuan devaluation

EDITED BY : BEETHIKA BISWAS 2MINS READ

Positions of LME aluminium increased throughout last week and found a support at lows. After a constant rise the contract closed at its week’s highest at US$1,774/mt on on Thursday. However, on Friday, November 25, LME official cash price of aluminium dropped to settle at US$ 1,751/mt.

The 3-months buyer price stands at US$1,751/mt; and the 3-months seller price stands at US$1,752/mt. The LME official opening stock of aluminium stands at 2131750 tonnes and total Live Warrants are estimated at 1356175 tonnes. LME Asian Reference Price of aluminium (3-months ABR) as on November 25 is estimated at US$1754.93/mt. 

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LME aluminium is expected to move between USD 1,750-1,780/mt on Monday November 28.
 
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On the premiums side, the LME US premium contract closes at US$160/mt, higher than European or Japanese.

In the Chinese domestic market, SHFE 1701 aluminium is predicted to range at RMB 13,700-13,900/mt. SMM expects spot aluminium to be trading at premiums of RMB 280-320/mt on Monday.

According to another report from SMM, China’s nonferrous metal output for 10 major metals increased 3.2% YOY in October (according to the National Development & Reform Commission’s website).

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Of them, aluminium output increased 1.1% year-on-year. This is mainly, due to the restarting of closed capacity and new expansion of existing capacity after a bullish move in LME aluminium prices.
 
Shanghai Metals Market has identified a number of macroeconomic indicators that may drive the prices.  According to SMM, Yuan’s devaluation is affecting domestic commodities recently. However, base metal prices on the SHFE to stay firm despite of economic and political indicators. It is also believed stock replenishment has been executed. Two sub-indices including purchase and raw material inventories in China’s PMI will be a focus of markets.

OPEC will discuss output cut dispute on November 30, and Russia may also participate. Saudi Aramco agreed to supply more oil to some Asian customers in January 2017, meaning Saudi Arabia will unlikely give up any market share of oil.

SMM predicts base metals may face external pressure this week.

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Aluminium Price LME China SMM

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EDITED BY : BEETHIKA BISWAS 2MINS READ

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