LME aluminium continued upward trend on news of supply disruptions; SHFE likely to trade higher today

The US dollar fell sharply against a basket of major currencies on Wednesday, after the Federal Reserve held US interest rates steady and its policymakers abandoned projections for further rate hikes this year as the central bank flagged an expected slowdown in the economy. LME base metals, except for aluminium, traded higher on Wednesday. SHFE aluminium crept 0.15%.

The three-month LME aluminium rose to a new three-month high of RMB 1,951per tonne on Wednesday, bolstered by the report that Rio Tinto suspended operations at its bauxite mine in north Australia due to a cyclone. LME aluminium later pared those gains to close the trading day 0.26% lower at US$1,935 per tonne. Norsk Hydro reported some progress in restoring operations after it was hit by a cyber-attack. Overnight losses in the US dollar will likely offer support to LME aluminium, which is expected to trade at US$1,860-1,960 per tonne today.

As on March 20, LME aluminium cash (bid) price stood at US$ 1922 per tonne, LME official settlement price stands at US$ 1923per tonne; 3-months bid price stands at US$ 1944 per tonne, 3-months offer price is US$ 1944.50 per tonne; Dec 20 bid price stands at US$ 2070 per tonne, and Dec 19 offer price stands at US$ 2075 per tonne.

The LME aluminium opening stock dropped to 1172100 tonnes. Live Warrants totalled at 761450 tonnes, and Cancelled Warrants were 410650 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1946 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange increased from US$ 2047 per tonne on March 20 to US$ 2064 per tonne today.

As longs added their positions, the most liquid SHFE aluminium May contract hit a nearly three-month high of RMB 13,825 per tonne in afternoon trade. It closed the trading day 0.91% higher at RMB13,795 per tonne. As longs took profits, the most liquid SHFE aluminium May contract weakened shortly before closing. It edged up 0.15% to close overnight at RMB 13,780 per tonne. In anticipation of consumption recovery, SHFE aluminium is expected to trade at RMB 13,600-13,900 per tonne today. Spot premiums are seen at RMB 220-260 per tonne.

Downstream consumption recovery and high spot premiums accounted for recent gains in SHFE aluminium. The contract is expected to remain strong in the short term.

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