SHANGHAI, May 18 (SMM) – The most-traded SHFE 2306 aluminium contract opened at 18,480 yuan/mt overnight, with its low and high at 18,450 yuan/mt and 18,545 yuan/mt before closing at 18,470 yuan/mt, up 95 yuan/mt or 0.52%. LME aluminium opened at $2,261/mt on Wednesday, with its high and low at $2,308/mt and $2,258.5/mt respectively before closing at $2,300/mt, an increase of $35/mt or 1.55%.
The negotiations on the US debt ceiling are speeding up, and an agreement may be reached this week. Market is expecting an extension of US debt ceiling, but the US economic downside risk remains high. Fundamentals: The domestic operating aluminium capacity continued to increase in May. In terms of cost, the average price of SMM prebaked anodes plunged month-on-month in May, and the power cost of smelters with captive power plants also declined. Demand is lower than expected, and new orders at downstream enterprises are weak. Overseas demand for aluminium semis is not good. Consumption will hardly improve in May. However, with the rapid decline in global aluminium ingot inventories, the risk of overseas short squeeze has increased. Rising spot premiums in east China should support SHFE aluminium prices.
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