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SHFE Aluminium to Stabilise at Highs amid Increasing Inventory

iconAug 16, 2021 14:16
Source:SMM
The most-traded SHFE 2109 aluminium contract continued to fluctuate at highs last week, with the lowest and highest level at 19,755 yuan/mt and 20,245 yuan/mt respectively.

SHANGHAI, Aug 16 (SMM) - The most-traded SHFE 2109 aluminium contract continued to fluctuate at highs last week, with the lowest and highest level at 19,755 yuan/mt and 20,245 yuan/mt respectively.

The contract closed the week at 20,130 yuan/mt, up 20 yuan/mt or 0.1% on the week. Aluminium production cuts in Guangxi and Yunnan expanded due to power curtailment. However, market players turned cautious after aluminium prices climbed above 20,000 yuan/mt as arrivals in consumption hubs increased in the second half of the week after transport gradually recovered from flooding.

European and US economic data were mostly in line with expectations, and the US dollar index hovered at a high level. LME aluminium opened the week at $2,574.5/mt and dropped to $2,538/mt before trading at $2,591/mt on Friday afternoon, up $16/mt or 0.62% for the week.

More aluminium ingots will arrive after transportation has improved, which will probably extend the increase in social inventory. However, it should be noted that longs may not be eager to take profit at highs since the impact of power curtailment is likely to intensify and the peak season is just half a month away. The most-traded SHFE aluminium contract is expected to remain high between 19,800-20,500 yuan/mt and LME aluminium between $2,540-2,650/mt this week. Spot discounts over the SHFE front-month aluminium contract are expected to stand at 0-40 yuan/mt.

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