Subscription inquiry

LME prices up again and now targeting $1,800–$1,850 per mton; European P1020 premiums tick up

Executive Summary

1. LME prices confirm break above $1,770 per mton, now targeting $1,800–$1,850 per mton.

LME 3M aluminum prices closed the session up 0.5% or $9 per mton at $1,784 per mton. Prices increased for a third-consecutive session, testing a fresh two-week intraday high of $1,790 per mton as: a) the Fear/VIX Index fell to a five-week low due to easing US-China trade uncertainty and b) the US dollar continued to weaken amid expectations of another interest rate cut from the Fed on September 18. Short-term momentum seems supportive of additional gains targeting the $1,800–$1,850 per mton trading range.

More details in full report.

2. EUROPEAN P1020 UPDATE. European P1020 premiums tick up amid supportive contango.

European premiums continue to hover slightly above their long-term equilibrium ranges amid support from wide nearby contangos, while spot activity seems slowly returning from the typical summer slowdown. As a result, HARBOR's European in-warehouse Rotterdam P1020 ingot duty-unpaid spot transaction premium slightly ticked up on the high end to $90–$100 per mton from a previous range of $90–$98 per mton, while HARBOR's in- warehouse Bilbao P1020 ingot duty-paid spot transaction premium firmed up to $155– $165 from a previous $150–$160 per mton.

More details in full report.

3. LME Cash–3M contango narrows to a one-week low, while tightness continues to intensify after November.

The LME Cash–3M contango tightened today to a one-week low of $26.75 per mton, from yesterday’s $28.75 per mton. Today’s narrowing in nearby spreads was a result of the Cash–September contango tightening to $5.75 from $7.75 per mton, while the September–November contango held without a change at $18.50 per mton. Moreover, tightness intensified around November 2019 and early 2020, while longer-term contangos continued narrowing to an eight-month low (unattractive for most players).

More details in full report.

4. China’s aluminum prices remain unable to extend gains beyond multi-month highs.

SHFE two-month aluminum prices closed the overnight session unchanged at 14,350 yuan per mton ($1,776 per mton, excluding VAT). Prices continued to face resistance when nearing levels as high as 14,440 yuan per mton ($1,782 per mton, excluding VAT) but found support from trade optimism; China confirmed that a new round of negotiations with the US will take place in the coming weeks. Prices also found support from expectations of further interest rate cuts in China.

More details in full report.