SHFE aluminium fell amid increased social inventory, while LME aluminium rose on Russian tariffs

SHANGHAI, Jul 6 (SMM) — The most-traded SHFE 2108 aluminium contract started last week at 18,980 yuan/mt and climbed to 19,075 yuan/mt before recording four consecutive days of declines. The contract rebounded on Friday, closing the week at 18,895 yuan/mt, down 50 yuan/mt or 0.26%. The arrival of the off-season and transportation restrictions for the 100th anniversary of the CPC on July 1 lifted social inventory and aluminium prices trended lower.

LME aluminium strengthened further as Russia decided to impose additional tariffs on aluminium products. LME aluminium opened the week at $2,490.5/mt and rose to $2,559/mt before trading at $2,523.5/mt on Friday afternoon, up $29/mt or 1.14% for the week.

Social inventory is expected to extend slight increase due to the off-season and inflows of SRB aluminium ingots into downstream producers. Concerns of tighter liquidity overseas have faded, but may reappear if US non-farm payrolls and European and US PMI data exceed expectations. The most-traded SHFE aluminium contract is expected to move between 18,400-19,000 yuan/mt and LME aluminium between $2,480-2,550/mt this week. Spot discounts of 0-40 yuan/mt and premiums of 0-10 yuan/mt are expected over the SHFE front-month aluminium contract.