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LME prices find interim support at $1,800 per mton; Over 500 kmton of aluminum product exemptions granted last week (mainly sheet and plate)

Executive Summary

1. LME prices range-trade just above $1,800 per mton amid thin volumes and a stronger US dollar.

LME 3M aluminum prices closed the session up 0.4% or $7 per mton at a one-week high of $1,807 per mton. Prices managed to remain above an intraday low of $1,799 per mton amid better-than-expected economic sentiment data out of the US and Europe. However, gains were capped at an intraday high of $1,814 per mton, as trading volumes for aluminum remained somewhat subdued, while US-China tensions continued to translate into a stronger US dollar. For now, LME 3M aluminum prices maintain key support at $1,770 per mton, as consumer buying stepped in and some producers defended the technical threshold last week—after a new twenty-eight-month low of $1,765 per mton was tested on Thursday.

More details in full report.

2. SECTION 232 UPDATE. At least six hundred individual requests were granted exemptions last week from Section 232 Tariffs on aluminum products.

About 525 kmton of aluminum products were granted exemptions last week, mainly for aluminum sheet products (nearly 400 kmton), plate (about 93 kmton), and foil (about 24 kmton), according to documents posted by the Department of Commerce's Bureau of Industry and Security (BIS). Other products receiving exemptions include about 4 kmton of aluminum forgings, 4 kmton of extruded products, and about 2 kmton of billet. So far in May, around 800 kmton of aluminum products have been granted exemptions. Overall, granted exemptions on aluminum products since July 2018 amount to over 4.2 million mton.

More details in full report.

3. LME Cash–3M contango unchanged at a three-week low (remains premium supportive).

The LME Cash–3M contango stood today unchanged from Friday, at a three-week low of $29.00 per mton. Narrower contangos through August were offset by a widening August– 3M contango: the Cash–June contango narrowed to $8.50 from $9.00 per mton, the June–July contango tightened to $8.75 from $9.00 per mton, and the July–August contango shrank to $11.00 from $11.25 per mton; conversely, the August–3M spread eased to a contango of $0.75 from Friday’s backwardation of $0.25 per mton. 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.

More details in full report.

4. MW Duty-Unpaid P1020 premium practically unchanged at 8.58–9.13 cent/lb.

HARBOR’s MW Duty-Unpaid Premium (MWP DUP) was assessed today at 8.58–9.13 cent/lb, hardly different from Friday’s 8.58–9.12 cent/lb amid a steady financial cost of metal in transit.

More details in full report.

5. China’s aluminum prices regain some ground amid production disruptions in Henan province.

SHFE two-month aluminum prices closed the overnight session at 14,265 yuan per mton ($1,827 per mton, excluding VAT), hardly changing from Monday’s close price but 0.6% higher compared to Friday’s. Prices were underpinned yesterday by an earlier-than- expected suspension of primary smelting operations in Henan province, where Henan Shenhuo reportedly shut down 250 kmtpy capacity after a fire on Sunday. Nevertheless, domestic economic data remained somewhat unsupportive, with industrial profits contracting in April by the most in three years. Technically, SHFE aluminum prices remain in an upward trend, targeting expected resistance at 14,500 yuan per mton ($1,860 per mton, excluding VAT).

More details in full report.