U.S. China negotiations at G 20 and Chalco's capacity cut announcement lift both LME and SHFE during Friday night

The dollar strengthened on Friday night, as markets awaited the outcome of talks between the leaders of the world's two biggest economies at the G-20 summit. Chinese President Xi Jinping and US President Donald Trump agreed to a temporarily pause an escalating trade war. A White House statement about the leaders' dinner said that Xi and Trump agreed to hold off on additional tariffs on each other's after January 1, as talks continued between both countries.

LME base metals ended in mixed territory and aluminium rose 0.85%. SHFE base metals, however, traded higher across the board on Friday night.

After closing Friday’s trading at US$ 1935 per tonne, LME aluminium started strengthening at night on anticipation of positive outcome from G-20 summit. The contract ended at US$1950 per tonne on Friday night after surging through the 20-day moving average to a high of US$1,959 per tonne. We expect it to trade rangebound at US$1,940-1,960 per tonne today.

As on November 30, Friday, LME aluminium cash (bid) price stood at US$ 1934.50per tonne, LME official settlement price stands at US$ 1935 per tonne; 3-months bid price stands at US$ 1937.50 per tonne, 3-months offer price is US$ 1938.50 per tonne; Dec 19 bid price stands at US$ 2005 per tonne, and Dec 19 offer price stands at US$ 2010per tonne.  

The LME aluminium opening stock dropped to 1052450 tonnes. Live Warrants totalled at 795275 tonnes, and Cancelled Warrants were 257175 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1935 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange increased to US$ 1973 per tonne today from US$ 1946 per tonne on November 30.

On Friday, the SHFE 1901 contract fell to close at RMB13,555 per tonne, near the day’s lows of RMB 13,535 per tonne.The contract closed lower for four consecutive days and this sent it below the five-day moving average. The contract then jumped past the 40-day moving average to the RMB 14,000 per tonne level before it erased some gains to close at RMB 13,755 per tonne during Friday night. It is expected to continue its rally today with a trading range of RMB 13,720-13,850 per tonne with spot discounts at RMB 80-40 per tonne. Chalco’s announcement on Friday of shutting 470,000 tonnes of aluminium capacity, together with winter production curbs, is likely to support  the direction of SHFE aluminium prices.