Solid demand and cost support helped SHFE 1906 contract outperform its LME counterpart last night; trend to continue in

The US dollar came under pressure as investors moved towards safe-haven currencies such as the Japanese yen and Swiss franc. Despite that the greenback hit a four-month high against the Chinese yuan on Monday. The yuan slid with the escalation of trade war between the US and China.  China announced they will impose higher tariffs on US$60 billion worth of US goods after the US announcement of a tariff hike on US$200 billion of Chinese products on Friday.

LME aluminium closed 0.25% lower but SHFE aluminium traded strong. LME official settlement price stood almost flat from the last closing at the end of Monday’s trading.  Three months LME aluminium is likely to trade at US$1,800-1,820 per tonne today.

As on May 13, LME aluminium cash (bid) price stood at US$ 1765 per tonne, LME official settlement price stands at US$ 1765.50 per tonne; 3-months bid price stands at US$ 1800 per tonne, 3-months offer price is US$ 1801 per tonne; Dec 20 bid price stands at US$ 1913 per tonne, and Dec 20 offer price stands at US$ 1918 per tonne.

The LME aluminium opening stock dropped to 1261450 tonnes. Live Warrants totalled at 843850 tonnes, and Cancelled Warrants were 417600 tonnes.

LME aluminium 3-months Asian Reference Price is hovering at US$ 1803.50 per tonne.

SME and SHFE Aluminium Price Trend

The benchmark aluminium price on Shanghai Metal Exchange has slightly dropped to US$ 2071 per tonne today from US$ 2072 per tonne on Monday May 13.

The most traded SHFE June contract extended Friday night’s gains to close the trading day 0.85% higher at RMB 14,225 per tonne yesterday, registering a five-day winning streak. The unwinding of short positions primarily accounted for the gains. SMM data showed that inventories of primary aluminium across major consumption areas in China continued to fall over the weekend, losing 36,000 tonnes during May 10 to 13. High costs and peak-season demand saw the SHFE 1906 contract outperforming its LME counterpart last night. While the other base metals declined overnight, the SHFE June contract ended slightly higher at RMB14,225 per tonne. It is expected to trade between RMB 14,200-14,300 per tonne, with spot premiums up to RMB 20 per tonne today.

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