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LME prices down 2% w/w but key $1,770 support still holds

Executive Summary

Special Note: HARBOR’s Daily Aluminum Commentary will not be published on Monday, May 27, due to the Memorial Day holiday.

1. LME prices down 2% this week as industry bearishness intensifies, although key support holds at $1,770 per mton.

LME 3M aluminum prices closed the session at $1,800 per mton, up 0.1% from yesterday but still 2.0% or $37 per mton lower on a weekly basis. Trading volumes were notably subdued on Friday (ahead of a long weekend as US and UK markets will be closed on Monday), with prices range-trading within $1,792 per mton and $1,808 per mton amid somewhat supportive trade-related comments from President Trump. Prices maintain key support at $1,770 per mton, as consumer buying stepped in and some producers defended the technical threshold.

More details in full report.

2. LME Cash–3M contango narrows but remains premium supportive; Tom–Next spread in backwardation amid concentrated inventory holdings.

Amid narrowing contangos through August, the LME Cash–3M contango narrowed today to a one-week low of $29.00 per mton, from $31.75 per mton yesterday. The Cash–June contango narrowed to $9.00 from $10.50 per mton, the June–July contango tightened to $9.00 from $9.50 per mton, and the July–August contango shrank to $11.25 from $11.75 per mton. Nevertheless, the Cash–3M contango continues to be supportive for spot premiums, as it is wide enough for most players to profitably finance short-term cash-and-carry deals. However, there the Tom–Next spread settled today at a backwardation of $1.00 per mton, experiencing small intraday backwardations for a second-consecutive session.

More details in full report.

3. MW Duty-Unpaid P1020 premium increases to 8.58–9.12 cent/lb.

HARBOR’s MW Duty-Unpaid Premium (MWP DUP) was assessed today at 8.58– 9.12 cent/lb, increasing from yesterday’s 8.50–9.05 cent/lb amid rising premiums in other regions against which the United States competes for metal units, and nearby spreads tightening increasing the financial cost of metal in transit.

More details in full report.

4. China’s aluminum prices close up for the first time in five sessions.

SHFE two-month aluminum prices closed the overnight session higher for the first time this week, up 0.5% to close at 14,180 yuan per mton ($1,819 per mton, excluding VAT), tracking gains across the Shanghai base metals complex amid somewhat supportive statements from the US and China--regarding the intention to reach a trade agreement. However in weekly terms, prices declined by 1.2%, experiencing their largest fall since the start of 2019 amid heightened trade uncertainty, technical selling triggered around last week’s a seven-month highs, and plunging LME prices.

More details in full report.