LME aluminium lost gains from the previous day overnight; SHFE under pressure in absence of cost support

The US dollar slipped to a week-low after Federal Reserve Chair Jerome Powell’s downbeat comments on the US economy bolstered expectations of an interest rate cut later this month. Base metals ended mixed.  LME aluminium fell 1.57%, and aluminium fell 0.72%. 

Three-month LME aluminium cut gains from the previous trading day as it fell to a low of US$1,820 per tonne and ended 1.57% lower on the day at US$1,821 per tonne, with pressure from the US$1,850 per tonne level. LME aluminium is likely to trade at US$1,790-1,850 per tonne.  

As on July 11, Thursday, LME aluminium cash (bid) price stood at US$ 1806.50 per tonne, LME official settlement price stands at US$ 1807per tonne; 3-months bid price stands at US$ 1827 per tonne, 3-months offer price is US$ 1828 per tonne; Dec 20 bid price stands at US$ 1932 per tonne, and Dec 20 offer price stands at US$ 1937per tonne.

The LME aluminium opening stock dropped substantially below the one million mark plunging down to 934500 tonnes on Thursday. Live Warrants totalled at 634650 tonnes, and Cancelled Warrants were 299850 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1846 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange (SME) dropped to US$ 2002 today from US$ 2025 per tonne yesterday.  

The most traded SHFE August contract weakened during yesterday, reversing overnight gains to end the trading day 0.33% higher at RMB13,805 per tonne. SMM reported a rebound in social inventories of primary aluminium ingots in China yesterday, the first weekly increase in about four months. The August contract lost most of the gains from the previous two sessions as rising shorts dragged it 0.72% lower at RMB 13,760 per tonne. Weak fundamentals are likely to see the contract at RMB 13,700-13,850 today. Rise in inventory along with lower costs for alumina, electricity and anodes, will continue to weigh on SHFE aluminium.