US dollar index recovers weighing down LME and SHFE aluminium

The US dollar Index stabilized following Friday's decline last week. The DXY was modestly higher on Monday, holding near 101.59, an increase of 0.04 per cent from previous day's close. The upside in greenback caused base metals to slip further down the price curve across major bourses of the world. LME aluminium closed at US$1,868 per tonne after night trading on Monday, down 2.14 per cent from last week's closing at US$1,909 per tonne on Friday. As Shanghai Metals Market (SMM) finds it the contract will test support at the 40-day moving average and move at US$1,850-1,885 per tonne on Tuesday, March 7.

According to Reuters' analysis, LME aluminium has found a support at US$1,857 per tonne, it is expected to hover above this level or bounce towards a resistance at US$1,920.

As on March 6, LME official cash buyer price of aluminium stands at US$1,867 per tonne, cash seller & settlement price is US$1,868 per tonne, 3M buyer price is US$1,871 per tonne, 3M seller price is US$1,872 per tonne, Dec1 buyer price is US$1,913 per tonne, and Dec1 seller price is US$1,918 per tonne. The current LME official Opening Stock of aluminium is estimated at 2141525 tonnes, total Live Warrants is 1298825 tonnes, and Cancelled Warrant is 842700 tonnes.

Source: http://www.lme.com 

As on March 3, LME Aluminium US Premium remains unchanged at US$215, LME Aluminium West-Europe Premium stands at US$95, LME Aluminium East-Asia Premium is US$95 and LME Aluminium South-East Asia Premium is US$15.

In China, the benchmark price of aluminium on Shanghai Metal Exchange (SME) is down at US$1,957 per tonne (-1.16 per cent) from its previous day's benchmark price of US$1,980 per tonne on Monday.

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Aluminium contracts traded on Shanghai Futures Exchange (SHFE) also dropped on Monday impacted on by a rising dollar. SHFE 1705 aluminum after opening at RMB 14,080 per tonne declined to close at RMB 13,830 per tonne yesterday. The contract is expected to test support at RMB 13,700 per tonne and the 40-day moving average. SMM says SHFE 1705 aluminum will trade at RMB 13,750-14,000 on Tuesday, March 7.

Spot aluminium in China's domestic market is expected to trade at discounts of RMB 190-150 per tonne on Tuesday, which SMM says is going to be a light calendar day. China will be releasing its foreign exchange reserves in February 2017.

Base metals which are currently hovering at lows are are expected to to rally after meeting strong support. In the near term, however, they will keep diverging.