Aluminium Futures Plunged over 3% amid Bearish Factors and Increased Short Positions

SHANGHAI, Nov 17 (SMM) – SHFE aluminium has been falling for four consecutive days as the SMM aluminium social inventory increased, the falling prices of coal and alumina weakened the cost support, and the downstream consumption was weak.

The plummeting coal prices intensified the the bearish sentiments in the aluminium market yesterday, and US dollar index hit a new high since July 22, 2020, weighing on the metals prices.

Aluminium futures continued to fall in the overnight trading on Tuesday. LME aluminium dropped by 3.24%, and SHFE aluminium contract fell by 3.11% as of 23:26.

The price decline in the past two days was mainly due to the increased short positions. The short positions of the most traded SHFE aluminium contract increased from 152,124 lots on November 15 to 246,272 lots.

The inventory of aluminium ingots continued to increase, which brought confidence to the shorts. The SHFE aluminium prices are expected to drop further in the short term.

The spot holders in east China were eager to sell the goods yesterday, and spot discount expanded to 140 yuan/mt over the December contract in the morning. The inventory increase in Jiangsu, Zhejiang, and Shanghai suppressed the transaction prices to 18,920-18,940 yuan/mt.

The prices in Gongyi stood at discounts around 20 yuan/mt against the prices in east China, while the downstream purchases did not increase significantly.