Executive Summary
1. LME PRICE ALERT. LME prices climb to a six-week high, now trading inside our expected $1,800–$1,850 per mton target range.
LME 3M aluminum prices climbed by 1.2% or $21 per mton during today’s session, closing at a new six-week high of $1,820 per mton. Prices entered into our expected $1,800– $1,850 per mton range as they continued to be supported by oil prices testing new six- week highs and outperformed a decline in copper prices. $1,850 per mton currently represents the 200-day moving average, which is an important technical threshold. Selling pressure could intensify as prices approach this level, but further upside would be unlocked if prices confirm a break higher.
More details in full report.
2. HARBOR FIRST ALERT! ALUBAR is now the official owner of Becancour (Reybec) rod mill plant.
HARBOR is hearing that ALUBAR Group, the largest Latin American aluminum electrical cable manufacturer, has now officially taken over ownership of the Becancour rod mill after reaching a recent labor union agreement and obtaining final approval from the respective Canadian court. The rod mill has an annual capacity of 90 kmtpy and its upcoming ramp-up should decrease the North American offshore import dependency for 2020 but not yet for the remainder of 2019.
More details in full report.
3. LME Cash–3M contango tightens for a fourth-consecutive session, to the narrowest in six weeks.
The LME Cash–3M contango tightened to a new six-weeks low of $24.75 per mton, from $25.25 per mton, amid today’s narrowing in the Cash–September contango to $3.75 from $4.00 per mton and in the November–3M contango to $1.50 from $2.00 per mton. Nevertheless, we estimate that the Cash–3M contango continues to be supportive for spot premiums around the world since it is wide enough for most players to profitably finance short-term cash-and-carry deals.
More details in full report.
4. China’s aluminum prices unable to extend gains above eleven-month highs.
SHFE two-month aluminum prices closed the overnight session down 0.2% at 14,390 yuan per mton ($1,790 per mton, excluding VAT). Prices tested levels as low as 14,350 yuan per mton ($1,785 per mton, excluding VAT) amid fresh selling activity and concerns about a slowdown in demand—economic data indicated producer prices fell annually for the second-consecutive month; prices later found some support from sustained gains across oil prices and LME aluminum prices.
More details in full report.