Shanghai aluminium snaps four-day losing streak

27 November 2017

Shanghai aluminium prices rose by 0.6 percent on Thursday, ending a four-day losing run despite some lingering bearish sentiment on the metal.

Aluminium is still down by 8.3 percent in Shanghai so far this month, as Chinese winter smelting restrictions in force from mid-November turned out to be less severe than the market expected. It remains up by 10.9 percent year-to-date.

“Supply-side reforms in the Chinese aluminium smelting sector are accelerating, and environmental regulations are further limiting output,” Societe Generale analysts wrote in a 2018 commodities outlook, forecasting that prices would average $2,075 a tonne in six months.

Global aluminium demand will rise by 5 percent next year and the market “will shift into a deficit for the first time in over a decade”, they added.

SHFE ALUMINIUM: The most-traded aluminium contract on the Shanghai Futures Exchange closed up 0.6 percent at 15,005 yuan ($2,275.48) a tonne, having finished below 15,000 yuan a tonne on Wednesday for the first time since Aug. 1.

GETTING TECHNICAL: ShFE aluminium closed below its 200-day moving average on Tuesday for the first time in more than 18 months, sending a sell signal to chart-following funds.

OPEN INTEREST: Market open interest in the ShFE aluminium contract fell to 790,710 lots on Wednesday, its lowest level since early August.

LME ALUMINIUM: On the London Metal Exchange, three-month aluminium was down 0.2 percent at $2,103 a tonne by 0733 GMT amid quiet trade due to the Thanksgiving holiday in the United States. It has lost less than 3 percent this month.

COPPER: Three-month copper on the LME was down 0.4 percent at $6,923.50 a tonne, having gained 0.7 percent in the previous session. The ShFE’s most-traded copper contract ended down 0.2 percent at 53,850 yuan a tonne.

OTHER METALS: Lead fell furthest in the base metals complex, closing down 2.9 percent in Shanghai and losing 1.2 percent in London. Zinc was the only other in the red, inching up 0.1 percent in Shanghai, but down 0.1 percent in London.

LME WAIVERS: The LME said on Wednesday it had agreed a range of waivers and discounts to assuage its members when it starts to charge a fee on off-exchange, over-the-counter (OTC) contracts that reference its prices.

INDIA: SBI Life Insurance Co. Ltd has increased investments in the metals, oil and gas sectors as a rise in energy and metals prices is set to drive growth in commodity stocks, the insurer’s chief investment officer told Reuters.

CHILE: The world’s largest copper miner, Codelco, may see a boost in investment cash regardless of who wins next month’s presidential runoff in Chile, as both candidates have vowed to end the state-run firm’s funding of the military.

MARKETS NEWS

Chinese shares tumbled on Thursday with the blue-chip index suffering its worst fall in nearly 1-1/2 years as worries about a selloff in the bond market bled into equities.

Source: Reuters