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US MW P1020 green aluminum spot premium launches; LME prices still within key resistance zone; US Congress to discuss bill considering aluminum market investigation

US MW P1020 green aluminum spot premium launches; LME prices still within key resistance zone; US Congress to discuss bill considering aluminum market investigation

Executive Summary

1. LME prices range-trade inside the $1,745–$1,770 per mton resistance zone; Fed signaling a pause in rate cuts seems short-term supportive for LME prices (the market remains somewhat skeptical, though).

LME 3M aluminum prices closed the session up 0.3% or $6 per mton, at a one-month high of $1,760 per mton. Prices rebounded from an intraday low of $1,745 per mton, supported by softer-than-expected moderation in US GDP growth in Q3 2019. Meanwhile, after today’s press conference by the Fed (which took place as the LME session had basically ended), the US dollar weakened by 0.6%, CME copper prices climbed by as much as 0.7%, oil prices regained 0.3%, and the VIX/Fear index weakened by nearly 6%. Fed’s latest views could support additional short-term gains in LME aluminum prices, but continue to denote medium-term downside risks to the demand growth outlook.

More details in full report.

2. SPECIAL ALERT. HARBOR announces publication of the world’s first US MW P1020 green aluminum spot premium.

In response to the rapid rise of sustainability awareness and given requests from some of our clients, HARBOR announces today the launch of the world's first green aluminum premium, the US MW P1020 Green Aluminum Spot Premium.

As of today, HARBOR’s US MW P1020 Green Aluminum Spot Premium stands at 16.05– 16.20 cent/lb. Meanwhile, HARBOR's US MW P1020 Ingot Duty-Paid Consumer-Supplier Spot Transaction Premium stands unchanged at 16.05–16.20 cent/lb (which equates to discounts of 1.05–1.20 cent/lb below current journalistic MW premium references).

More details in full report.

3. HARBOR FIRST ALERT. House Agriculture Committee approves draft version of a bill that would require the US Government Accountability Office to investigate the aluminum market.

Today, the US House Agriculture Committee approved a bipartisan discussion draft of a bill to reauthorize the Commodity Futures and Trading Commission’s regulatory oversight (CFTC Reauthorization Act of 2019, or H.R. 4895), including the conduct of a study of the aluminum market. If enacted, the Reauthorization Act would require the US Government Accountability Office (GAO) to conduct a study of the domestic and global aluminum markets, and to deliver a report containing the results of this investigation within 180 days.

More details in full report.

4. LME Cash–3M contango remains close to zero as December’s double-digit backwardation persists (bearish for premiums).

The Cash–3M contango eased today to $3.50 per mton from yesterday’s nine-month low of $2.50 per mton, mainly as a result of a slight easing in the December–January backwardation to $13.00 per mton from a record high of $15.00 per mton. Meanwhile, the Cash–November contango narrowed to $9.50 from yesterday’s $10.25 per mton, and the November–December contango held without a change at $5.00 per mton.

More details in full report.

5. China’s aluminum prices remain near support zone but still struggle to regain upward momentum.

SHFE two-month aluminum prices closed the overnight session up 0.4% at 13,830 yuan per mton ($1,735 per mton, excluding VAT) but continued to limit intraday gains near the 200-day simple moving average threshold, which stands at 13,879 yuan per mton ($1,741 per mton, excluding VAT). Prices sustained early gains from technical buying but lacked enough strength amid lingering demand growth concerns (domestic manufacturing data due tonight is expected to signal another monthly contraction).

More details in full report.