Strong dollar weighs on LME aluminium; range-bound trading expected in the short term

LME aluminium after scaling a nine-month high on Tuesday, last week, January 24, has been easing out due to a light trading sentiment. The contract has fallen by 2.29 per cent from the mid-week high of US$1,870 per tonne. On Friday, January 27, LME aluminium closed at US$1,827 per tonne after night trading, down 0.59 per cent from the previous day's closing of US$1,838 per tonne.

The monthly chart of US dollar index has been throwing up some bullish indications. In the coming days too, the index is expected to move up. If that happens, LME aluminium will dip further moving in the range of US$1,810-US$1,830 per tonne.

Another indicator, the crude oil finished lower on Friday, last week. The futures logged a modest weekly loss, as investors turned their attention to rising production in the U.S. and away from OPEC and other producers' commitment to curbing global oversupply. With crude oil prices hovering at lows, chances are less that LME aluminium will pick up momentum in the short term.

As on January 27, LME official cash buyer price of aluminium stands at US$1,826.5 per tonne, cash seller & settlement price is US$1,827.5 per tonne, 3M buyer price is US$1,823 per tonne, 3M seller price is US$1,823.5 per tonne, Dec1 buyer price is US$1,858 per tonne, and Dec1 seller price is US$1,863 per tonne. The current LME official Opening Stock of aluminium is estimated at 2282375 tonnes, total Live Warrants is 1636300 tonnes, and Cancelled Warrant is 641925 tonnes.

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As on January 26, LME Aluminium US Premium stands at US$190, LME Aluminium West-Europe Premium is US$80, LME Aluminium East-Asia Premium is US$90, and LME Aluminium South-East Asia Premium is US$15.