LME aluminium to hold firm

LME aluminium will move at highs of USD 1,670-1,685/mt on Monday.

Many cities in China introduced new measures to curb property market. China’s State Council said local governments are not allowed to approve new capacity. Only a small amount of aluminium ingot arrived in major consumption hubs after the weeklong holiday. So, spot aluminium prices in China should remain firm. SHFE 1611 aluminium will rise to RMB 12,800-13,000/mt and spot premiums of RMB 580-620/mt are expected over SHFE 1610 aluminium contract.

LME aluminium prices
Source: AlToolz LME Aluminium Prices

Key macroeconomic indicators for base metal prices

Market will eye a series of economic data from China this week. While market liquidity in China is ample, investors are still keen to find out where money will go after 19 cities introduce house purchase curbs. Credit data in September cannot reflect passion for home buying following house purchase curbs. The share of home mortgage in new lending exceeded 50 per cent for five months in a row since China introduced new measures to curb home buying in April this year, with the share hitting 98.7 per cent in July and 71.2 per cent in August. The gap between M1 and M2 will hardly narrow.    

China’s CPI rose 1.3 per cent YoY in August, with the growth down 0.5 percentage point. China’s PPI fell 0.8 per cent YoY in August, with the decline narrowing. CPI for September will not directly reflect inflation level, but will instead suggest how much inflationary pressure home buying has absorbed. 

The US will release LMCI and consumption data. US non-farm sector added just 156,000 jobs in September, so expectations are strong that the US will not raise interest rate until December. The US Fed will release minutes for its September meeting on October 12. 

The second round of US presidential election debate, due to take place on Monday, will also grab market competition.

Crude oil prices staged a strong comeback following OPEC output cut deal.

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