Resistance at US$1,917/t likely to check the rally in LME aluminium

LME aluminium has reversed its uptrend this week. The light metal traded globally dropped to US$1,901 per tonne after night trading on Monday, July 17, down from US$1,904 per tonne last Friday, July 14. High inventories in LME registered warehouses and slack demand in the international markets are putting a downward pressure on aluminium prices.

Reuters’ technical analysis suggests that LME aluminium may retest a support at US$1,895 per tonne, a break below which could cause a further loss to around US$1,881.50 per tonne in the near term. On the upper side, the lightmetal contract faces a resistance at US$1,917 per tonne, a break above which can lead to a gain to US$1,928 per tonne on Tuesday, July 18.

According to Shanghai Metals Market projections, LME aluminium will stay volatile and fluctuate largely in the range of US$1,900-1,927 per tonne on Tuesday, July 18.

As on July 17, LME official cash buyer aluminium price (Bid Price) stands at US$1,900.50 per tonne, cash seller & settlement aluminium price (Offer price) is US$1,901 per tonne, 3M Bid Price is US$1,924.50 per tonne, 3M Offer Price is US$1,925 per tonne, Dec1 Bid Price is US$1,955 per tonne, and Dec1 Offer Price is US$1,960 per tonne. The current LME official Opening Stock of aluminium is estimated at 1378250 tonnes, total Live Warrant is 1064650 tonnes, and Cancelled Warrant is 313600 tonnes.

LME aluminium premiums remain unchanged across major markets worldwide. As on July 14, LME aluminium premium for the US stands at US$180, LME Aluminium West-Europe Premium stands at US$80, and LME Aluminium South-East Asia Premium is US$15 (per tonne).  

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SME and SHFE Aluminium Price Trend

The benchmark aluminium price at Shanghai Metal Exchange (SME) has dropped at US$2,097 per tonne on Tuesday, July 18, from Monday’s benchmark price of US$2,099 per tonne.

At Shanghai Futures Exchange (SHFE), the most active aluminium future contract SHFE 1709 aluminium opened at RMB 14,400 per tonne on Monday, July 17, and then hit nearly 2-month high of RMB 14,550 per tonne. Later the contract fluctuated before ending slightly down at RMB 14,500 per tonne. SMM predicts that SHFE 1709 aluminium will give up the gains and range at RMB 14,360-14,500 per tonne on Tuesday, July 18.

Spot aluminium in east China market is expected to trade at discounts of RMB 170-130 per tonne over SHFE 1708 aluminium on Tuesday.

The market focus will be on UK’s annualized June CPI and retail sales, ZEW economic climate index in eurozone for July and US imported goods price index, on Tuesday, SMM said.

India MCX Aluminium Price Trend

In India, aluminium futures contract on the Multi Commodity Exchange reversed higher after recording a low of INR120.90 last Wednesday, July 12. It is currently trading at INR 124.10 per tonne. Market watchers opine that a resistance at INR 126 per tonne may cap the rally in MCX aluminium.