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LME prices up and targeting $1,810 per mton.; LME inventories up to nineteen-month highs

Executive Summary

1. LME prices climb on easing trade concerns, now targeting $1,810 per mton.

LME 3M aluminum prices closed the session up 0.9% or $15 per mton at $1,775 per mton. Prices climbed to their highest level in more than a week as they rallied during the second half of the session after comments by President Trump reinforced expectations that for the US to delay Section 301 tariffs against China which are scheduled for this weekend. LME 3M prices tested an intraday high of $1,779.50 per mton and managed to close the session above recent interim resistance around $1,770 per mton as trade optimism outweighed concerns about continued inventory buildups in Asia. Technical price indicators continue to suggest range-trading within $1,740–$1,940 per mton.

More details in full report.

2. ALUMINUM PRODUCTION UPDATE. Hillside primary aluminum production guidance unchanged despite recent blackouts in South Africa.

A spokesperson from South32 told HARBOR that load-shedding events during the recent blackouts in South Africa are not expected to have an impact on FY20 production guidance for the company’s Hillside primary aluminum smelter. Therefore, HARBOR expects the 720 kmtpy Hillside primary aluminum smelter in South Africa, fully owned by South32, to continue operating close to its full capacity to meet its production guidance for the fiscal year ending in June 2020. In Q3 2019, the smelter operated at a production run-rate of 718 kmtpy despite a modest impact from load-shedding events.

More details in full report.

3. LME Cash–3M contango loosens further as December–January tightness diminishes.

The LME Cash–3M contango loosened today to a ten-week high of $13.25 per mton from Wednesday’s $8.75 per mton, as the December–January backwardation eased to a three- month low of $5.00 from yesterday’s $9.00 per mton and the January–February contango widened to $10.50 from $9.75 per mton.

More details in full report.

4. LME aluminum inventory buildups continue in Asia; total aluminum inventories climb to a fresh nineteen-month high.

LME inventories in Asia experienced buildups for an eleventh-consecutive session after warehouses in Port Klang, Malaysia, received fresh inflows totaling 15,000 mton today. As a result, total LME inventories increased to a new nineteen-month high of 1,343,800 mton, while live inventories (i.e., excluding canceled warrants) climbed to a two-year high of 1,218,125 mton.

More details in full report.

5. HARBOR’s Implicit Green Aluminum Upcharge assessed today at zero.

HARBOR’s US MW P1020 Green Aluminum Spot Premium was assessed today at 12.05– 13.05 cent/lb, unchanged from the previous session. HARBOR's US MW P1020 Ingot Duty- Paid Consumer-Supplier Spot Transaction Premium also stands unchanged at 12.05–13.05 cent/lb. As a result, HARBOR’s Implicit Green Aluminum Upcharge was assessed today at zero, unchanged from the previous assessment.

More details in full report.

6. China’s aluminum prices fall from a near-one-month high on technical selling.

SHFE December 2019 aluminum prices closed the overnight session down 0.3% at 14,055 yuan per mton ($1,776 per mton, excluding VAT). In after-hours trading, prices faced further technical selling until nearing the 14,000 yuan per mton threshold ($1,769 per mton, excluding VAT), where they were supported by remarks from President Trump regarding a nearing US-China trade deal.

More details in full report.