LME aluminium touches 18-month high on US data

Wednesday, August 27, 2014

Three month LME aluminium prices touched an 18-month high yesterday, reaching an intraday high of $2,100/tonne, a level last seen in February last year as stronger economic data coming out of the US increased the demand outlook. Aluminium prices have been one of the best performing industrial metals this year, rallying over 16% year-to-date, with prices well supported in recent sessions on the expectation of bullish durable goods orders. The data released yesterday exceeded expectations with orders rising 22.6% m/m in July, massively outstripping expectations of 8.0% growth m/m. Prices found strong support throughout the session, trading towards $2,100/tonne immediately after the release before limit orders were triggered, trimming the day’s gains to just under a percentage point as prices closed just above $2,082/oz.

Front month NY sugar prices managed to recover some of Monday’s losses during yesterday’s trading session as prices closed above 15.70c/lb. Sugar futures have faced considerable downward pressure since early July when prices were unable to breach a triple top forming around 18.00c/lb. Many market participants forecast another year of surplus with the International Sugar Organisation expecting excess supply of 1.3m tonnes in the 12 months from October. Front month NY sugar futures have posted modest declines since the start of the year, down 5.8% but have erased almost 15% since meeting firm resistance in early July at 18.00.

WTI prices posted modest gains yesterday as investors anticipated crucial supply data, due out later today. API data released yesterday evening offered some support, indicating crude stocks fell by 1.3m barrels w/w. However, market participants polled by Bloomberg expect crude stocks to decline by 2.5m barrels w/w with special attention being paid to flows in and out of Cushing. Front month futures added 0.55% throughout the session, closing just above $92.80/bbl after struggling to hold on to intraday gains towards $94.40/bbl as futures were held firmly within the recently established lower trading range.

Front month Brent futures struggled to hold on to intraday gains towards $103.40/bbl yesterday as a weaker fundamental outlook depressed prices to close at $102.50/bbl. Prices have shed 11.5% since the June peak as easing geopolitical tensions erased a significant amount of the risk premium but with the focus now back on fundamentals, any flaring tensions in Iraq and between Russia and Ukraine could see prices quickly recover towards previous areas of consolidation.  

3-M LME aluminium prices briefly touch $2,100/tonne

LMAHDS03 Comdty LME ALUMINUM 3 2014 08 27 07 57 12

Front month NY sugar future struggles to gain ground

SB1 Comdty Generic 1St SB Fut 2014 08 27 08 03 02 

Events for today

0700

DE

Sep

GfK Consumer Sentiment

1530

US

w/e

EIA Energy Stocks

OE: 

Sep  Natural Gas (NYMEX) 

Sep  Copper & Gold (COMEX) 

Topics: Aluminium, Brent, WTI, LME, Sugar
More from: Kash Kamal