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LME prices rebound after unable to break below key support; US will impose as scheduled a new 10% tariff on most Chinese aluminum products

Executive Summary

1. Key price support holds, price rallies.

LME 3M aluminum prices closed the session up 0.8% or $15 per mton at $1,785 per mton. Prices rebounded from an intraday low of $1,761 per mton, supported by broad-based gains across the base metals complex and renewed optimism for a potential de-escalation in US-China trade tensions. LME prices are still testing crucial $1,745–$1,770 per mton zone, as anticipated.

More details in full report.

2. US TARIFFS ALERT. Chinese aluminum products will still face an additional 10% Tariff from September on.

The US Trade Representative Office (USTR) determined that an additional 10% tariff on certain imports from China should be delayed to December 15, according to a press release published today by the executive office. Among other non-aluminum products, the delay is only applicable for aluminum cooking and kitchen ware products from China under the HTS codes 76151020 and 76151071, according to the published list from the USTR. Tariffs on basically all unwrought aluminum (primary/secondary) and semi- fabricated products (sheet/plate, foil, wire, and extrusions) will become effective on September 1, according to the list published today by the USTR.

More details in full report.

3. LME Cash–3M contango remains wide and above $30 per mton (supportive for spot premiums).

The Cash–3M contango narrowed to $31.00 per mton from yesterday’s eleven-week high of $32.00 per mton, as a widening in the August–September contango (to a five month peak of $10.50 from $9.75 per mton) was not enough to offset narrowing Cash–August contango (to $3.75 from $5.00 per mton) and a slight tightening in the September– October contango (to $7.50 from $8.00 per mton). We estimate that the Cash–3M contango remains supportive for spot premiums around the world 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 slightly up to 8.67–9.49 cent/lb.

HARBOR’s MW Duty-Unpaid Premium (MWP DUP) was assessed today at 8.67–9.49 cent/lb, increasing from yesterday’s 8.64–9.46 cent/lb amid today’s narrowing in nearby contangos increasing the financial cost of metal in transit.

More details in full report.

5. MEXICO ALUMINUM ALERT. Mexico initiates dumping investigation for imports of Chinese- origin aluminum circles.

Last Friday, the Mexican government announced it was beginning an anti-dumping investigation for imported Chinese-origin aluminum circles after officially accepting the request issued by Almexa Aluminio, which is by far the main domestic producer (the only other producer in Mexico is Azinsa). The HS code involved is 769910, and the investigated period will be for January 1, 2018 to December 31, 2018. The case would take at least six months to reach a final resolution.

More details in full report.

6. SHFE PRICE ALERT. China’s aluminum prices close at a new two-month high and confirm a technical breakout above key resistance threshold.

SHFE two-month aluminum prices closed the overnight session up 1.2% at a new two-month high of 14,165 yuan per mton ($1,780 per mton, excluding VAT), holding around this level in after-hours trading. Prices were buoyed by further buying activity triggered amid a) concerns about potential primary aluminum supply disruptions at a top producer in Shandong and b) renewed trade optimism after the US announced a delay in additional tariffs for certain Chinese imports. SHFE aluminum prices confirmed today a technical break above the key 200-day moving average threshold, next short-term technical target at 14,500 yuan per mton ($1,820 per mton, excluding VAT).

More details in full report.