LME aluminium is getting back to contango; SHFE climbed to its highest since September yesterday

The US dollar continued to rise Wednesday, moving close to a one-week high, as improving economic data reduced the likelihood of a Federal Reserve interest rate cut in 2020. LME base metals and the SHFE complex traded mixed yesterday. LME aluminium gained 1.02% and SHFE aluminium grew 0.85%.

Three months LME aluminium managed to get pulled by the SHFE counterpart and closed higher on Wednesday at US$ 1777 per tonne. LME aluminium is getting back to contango after a brief period of backwardation.

As on December 18, Wednesday, LME aluminium cash (bid) price stood at US$ 1756 per tonne, LME official settlement price stands at US$ 1758 per tonne; 3-months bid price stands at US$ 1776 per tonne, 3-months offer price is US$ 1777 per tonne; Dec 20 bid price stands at US$ 1833 per tonne, and Dec 20 offer price stands at US$ 1838 per tonne.

The LME aluminium opening stock increased again to 1487775 tonnes. Live Warrants totalled at 1341975 tonnes, and Cancelled Warrants were 145800 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1772 per tonne.

SHFE Aluminium Price Trend

Benchmark aluminium price for SHFE (Shanghai Future Exchange) increased to US$ 2040 per tonne on Thursday, December 19, 2019.

Aluminium was the stellar performer on Wednesday in SHFE, as firm spot prices supported by slower-than-expected production recovery and transport restrictions in snowy weather in north China, and bullish technical indicators boosted investor sentiment.

The most traded SHFE 2002 contract climbed to its highest since September 25 at RMB 14,130 per tonne, before it ended the day 0.93% higher at RMB14,100 per tonne. SHFE aluminium is expected to remain firm in the near term, but there are risks of downward correction as speculative longs may book profits. SMM will release China primary aluminium inventory data on Thursday, which are expected to show another decline, and will offer support to prices.