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LME prices break above key resistance $1,740 per mton; Long-term spreads tighten amid forward selling

Executive Summary

1. LME prices rise as they continue to find support above $1,740 per mton.

LME 3M aluminum prices closed the session up 1.0% or $17 per mton at a one-week high of $1,753 per mton. Aluminum prices increased by the most in three weeks, rallying along with copper amid increasing trading volumes as: a) signs of apparent progress in US- China trade talks, b) US new home sales for September were revised upward to a new twelve-year high, and c) no inventory buildups took place at LME aluminum warehouses in Asia. Technically the door has been closed for $1,680-1,550 per mton.

More details in full report.

2. LME nearby backwardation widens while longer-term spreads tighten amid forward selling for 2020 (unsupportive for spot premiums).

The Cash–3M backwardation widened to 11.00 per mton from yesterday’s $9.25 per mton, as a steeper Cash-December backwardation of $6.00 per mton more than offset a slightly narrower December–January backwardation of $13.50 per mton. This continues to be short-term bearish for spot P1020 premiums across the board. Moreover The 3M–15M contango narrowed to a new two-month low of $74.00 per mton from yesterday’s $79.75 per mton.

More details in full report.

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

HARBOR’s US MW P1020 Green Aluminum Spot Premium was assessed today at 16.05–16.20 cent/lb, unchanged; and HARBOR’s Implicit Green Aluminum Upcharge was assessed at zero. Standard Specification: daily duty-paid premium paid over the LME cash price for spot physical 99.7% high-grade aluminum with 4.5 kg or less of CO2 emitted per kilogram of aluminum produced, according to Level 2 disclosure per IAI’s “Aluminium Carbon Footprint Technical Support Document—v1-final—15th Feb 2018.”

More details in full report.

4. China’s aluminum prices fall but hold within the 200-day moving average zone.

SHFE December 2019 aluminum prices closed the overnight session down 0.4% at 13,900 yuan per mton ($1,749 per mton, excluding VAT), sustaining early losses due to apparent profit-taking activity (after being recently unable to break above the 200-day moving average zone). Still, prices were unable to extend losses in after-hours trading amid ongoing trade-optimism. SHFE aluminum prices remain capped by the 200-day moving average zone.

More details in full report.