Weekly highlight: LME aluminium ended the week higher and SHFE traded within a close range; no significant gains likely

The US dollar rose to two-week highs at the beginning of the week as US-China trade tensions eased after the world’s two largest economies agreed to restart trade talks. The dollar index then continued to edge lower from recent highs over the week sliding down to 96.735. LME base metals started the week higher, plunged in mid-week and regained some losses towards the end.

LME aluminium traded higher this week compared to the last. LME aluminium started the week with US$ 1778 per tonne but lost some gains mid-week to came down to US$1754.5 per tonne. The contract however closed the week higher at US$ 1779.5per tonne on Friday. The LME contract recovered the last week’s losses on the back of lower inventories and premiums in spot offers. Three-month LME aluminium also gained over last week and ended the week at US$ 1802 per tonne. The cash contract is not likely to fluctuate much in the coming week and expected to trade within a close range within US$ 1770-1800 per tonne.

As on July 5, Friday, LME aluminium cash (bid) price stood at US$ 1779 per tonne, LME official settlement price stands at US$ 1779.50 per tonne; 3-months bid price stands at US$ 1801 per tonne, 3-months offer price is US$ 1802 per tonne; Dec 20 bid price stands at US$ 1910 per tonne, and Dec 20 offer price stands at US$ 1915 per tonne.

The LME aluminium opening stock dropped substantially below the one million mark this week plunging down to 964400 tonnes on Friday. Live Warrants totalled at 635500 tonnes, and Cancelled Warrants were 328900 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1804 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange (SME) also followed the trend in LME and started the week higher at US$ 2022 per tonne and then plunged during mid-week. The prices regained and closed the week at US$ 2015 per tonne.  

The most active SHFE August contract closed lower at RMB 13,665 per tonne in the beginning of the week.  The contract failed to stand above the RMB13,900 per tonne level over the week despite gains towards the end. SHFE aluminium rose 0.87% to RMB 13,895 per tonne yesterday; however, as longs took profits, the SHFE August contract erased some of the gains to close the trading day 0.36% higher at RMB 13,790 per tonne. Demand weakened, whilst aluminium producers were not keen to recover production. Falling social inventories of primary aluminium ingots will continue to support aluminium prices, but declining prices of alumina and anodes will weigh on it. SHFE aluminium is expected to remain weak and trade rangebound within RMB 13,900 per tonne next week.