Both LME and SHFE aluminium to trade rangebound with downward room on stronger US dollar

LME aluminium received support and rebounded to close at US$ 2313 per tonne on May 15 from US$ 2285.5 per tonne on previous closing. After that it fell to a low of $2,274 per tonne last night. The contract is expected to trade range bound with downward room today as the US dollar strengthened and rebounded to a four-month high of 93.46, and closed at 93.25 last night.  

The pickup in trading volumes at the London Metal Exchange (LME) following years of stagnation is going to be a common topic of discussion during this week’s LME Week Asia conference in Hong Kong, industry’s largest event in Asia this week. It was the U.S. sanctions against Rusal that drove the trading frenzy in the LME aluminium contract.

As on May 15, LME aluminium cash (bid) price stands at US$ 2312 per tonne, LME official settlement price stands at US$ 2313 per tonne; 3-months bid price stands at US$ 2310per tonne, 3-months offer price is US$ 2310.50 per tonne; Dec 19 bid price stands at US$ 2257 per tonne, and Dec 19 offer price stands at US$ 2262 per tonne.

The LME aluminium opening stock dropped further to 1247100 tonnes as more and more metals are going out. Live Warrants totalled at 853050 tonnes, and Cancelled Warrants were 394050 tonne.

LME aluminium 3-months ABR price is hovering low at US$ 2317.07 tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange increased from US$ 2295 per tonne on May 10 to US$ 2300 per tonne on May 11.

The SHFE 1805 contract was delivered at RMB 179,350 per tonne yesterday. Amid thin trading liquidity, the SHFE 1807 contract traded rangebound at RMB 14,685-14,735 per tonne during the day. We expect it to continue its stable movement. Then the SHFE 1807 contract regained most losses overnight to close at RMB 14,715 per tonne with support from the five- and 10-day moving averages. Open interest of SHFE aluminium shrank 68,080 lots to 653,246 lots, falling to a record low since July 2017. The contract is likely to hover at RMB 14,650-14,750 per tonne with spot discounts at RMB 70-30 per tonne today. 

Most LME base metals dipped today morning as the US dollar strengthened. Key factors to watch today include the eurozone consumer price index (CPI) in April, the US industrial productivity in April, and the Energy Information Administration’s (EIA) weekly crude oil inventory.  The US dollar is expected to hover at highs while base metals are likely to trade rangebound with downward room as the dollar strengthens and inventory pressure lingers.

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