LIVE FUTURES REPORT 13/04: SHFE aluminium prices track strength seen on LME; zinc under pressure amid SRB stockpile concerns

The most-traded June aluminum contract on the SHFE traded at 14,325 yuan ($2,279) per tonne as of 09:53am Shanghai time, up by 250 yuan from Thursday’s close.

A bout of panic buying in response to the sanctions placed on Russian aluminium producer UC Rusal pushed the LME’s three-month aluminium price to a 10-year high of $2,331 per tonne on Thursday.

Spot aluminium premiums in Europe are also mirroring the robustness in futures prices.

Metal Bulletin’s daily duty-unpaid, in-warehouse Rotterdam aluminium premium was assessed at $105-115 per tonne on Thursday, up from $98-105 a day earlier, due to spot liquidity returning for the first time since the United States Treasury Department’s sanctions on Rusal were announced.

“I think the recent activity could be a game changer for aluminum. We were predicting lower prices, and saw the aluminum market as ample supplied – right until last week. We now have to rethink our entire forecast for aluminum,” Daniel Briesmann, analyst at Commerzbank, told Metal Bulletin.

Lending further upward pressure to aluminium prices was the strength seen in the alumina market.

China’s domestic alumina price rose to 2,700-2,750 yuan per tonne on Thursday, up from 2,650-2,700 yuan per tonne a week earlier, according to Metal Bulletin’s latest assessment.

Metal Bulletin’s benchmark daily fob Australia alumina index was calculated at $477.16 per tonne on Thursday, compared with $375.89 per tonne on March 12.

Bids and price indications for scarce spot alumina cargoes soared this week, while buyers digested the effect of US sanctions on Rusal in a market that has already been tightened by the force majeure at Hydro’s Alunorte refinery in Brazil.

Zinc prices edge lower on stockpile concerns

• Speculation that China’s State Reserve Bureau (SRB) will release stockpiles has kept zinc prices subdued this morning.
• The SHFE June zinc contract price slipped 60 yuan to 23,565 yuan per tonne.
• “Speculation swirled that China’s State Reserve Bureau was planning to release inventory. Inventories on the LME are already up 10% this year, including a sudden inflow of 80,000 tonnes in early March,” according to ANZ Research.

Base metals prices

• The SHFE June copper contract price dropped 90 yuan to 50,530 yuan per tonne.
• The SHFE May lead contract price dipped 170 yuan to 18,305 yuan per tonne.
• The SHFE May tin contract price rose 320 yuan to 143,480 yuan per tonne.
• The SHFE July nickel contract price jumped 1,740 yuan to 103,890 yuan per tonne.

Currency moves and data releases

• The dollar index was up by 0.04% at 89.8 as of 09.53am Shanghai time.
• In other commodities, the Brent crude oil spot price down by 0.53% to $71.76 per barrel as of 09.53am Shanghai time.
• In equities, the Shanghai Composite was down by 0.05% to 3178.72 as of 10.41am Shanghai time.
• In US data on Thursday, weekly unemployment claims came in at 233,000, slightly above the estimate of 231,000, while import prices recorded no change in March following a 0.3% rise in the preceding month.
• The economic agenda is light today with data out already showing China unexpectedly reported a trade deficit of $4.98 billion in March, compared with a $23.56 billion surplus in the same month a year earlier. It was the first trade gap since February 2017. Last month, China’s imports soared 14.4% year on year to $179.07 billion while exports fell by 2.7% to $174.18 billion.
• Later, we have German final consumer prices, the European Union’s trade balance and US data that includes preliminary University of Michigan consumer sentiment and inflation expectations and Jolts job openings.