Cautiously optimistic' trading expected in aluminium; Chalco hikes prices sharply

LME aluminium prices are tracing a downward slope again. Unlike other base metals which are trending up almost in unison, the lightmetal traded on LME closed at US$1,706/mt after night trading on Tuesday, November 8. The contract was traded at US$1,716/mt a day earlier on the Exchange.

At the recently ended ‘LME Week - annual shindig of the industrial metals markets,’ Jorge Vasquez, founder of Harbor Aluminum said, aluminium as a commodity will suffer from a rising glut, record-high stocks, especially in China's key markets, and the increasing forced release of those stocks as financing metrics become strained. Looking at the screen this morning, it seems the observation was not incorrect.

LME Aluminium US Premium is still higher at US$150 whereas West-Europe Premium and East-Asia Premium stand at US80 and US$65 respectively. LME Aluminium South-east Asia Premium is still the lowest at US$15.

Traders are looking at the US Presidential election today and how it impacts the market at large. SMM predicts that LME aluminium will move at US$1,715-1,740/mt.

In China, aluminium traded on Shanghai Metal Exchange closed at US$2,111/mt on Tuesday and opened at US$2,174/mt on Wednesday, November 9. China Aluminum International Trading Co. (Chalco Trading) announced big hike in aluminium prices it offered in major markets today.  

The details are as follows:

Unit: yuan/tonne

According to SMM analysis, snowfall in northwest China will support spot aluminium prices; SHFE 1701 aluminium will range between RMB 13,500-13,700/mt on Wednesday.

NewsIn China’s domestic market, spot aluminium should increase by RMB 100/mt to RMB 16,650-16,800/mt on Wednesday, said SMM.

Key macroeconomic indicators:

• Market will eye US crude oil stocks and China October inflation data on Wednesday. 
• China’s CPI might return to 2% growth in October, due to rising food and non-food prices. Raw material purchasing price index under China’s October official manufacturing PMI rose 5.1 to 62.6. So, PPI should rise as well.  
• Markit’s US manufacturing PMI hit the highest since October 2015 in October. New order index also at its year-high. So, US retail sales will continue improving in October.
• API US crude oil stocks grew slower last week. This will dampen outlook for oil prices.
• The US dollar will likely strengthen and commodity market will take a hit if Hilary wins in US presidential election, and vice versa.

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