The aluminium three-month price had reached $2,000 per tonne during Wednesday afternoon, a high not hit by the light metal since November 2018.
Similarly, Tuesday’s closing price for aluminium of $1,977.50 per tonne also crossed a near two-year high, since a price above $1,970 per tonne for the light metal had not been reached on the LME since December 5, 2018, when the metal’s closing price was $1,973 per tonne.
Open interest for aluminium fell significantly on Wednesday, dropping to 916,442 open positions from 929,681 open positions, with the notable liquidation a contributing factor to the metal's price rise, despite this being broadly incongruous with the metal's underlying fundamentals.
Another factor that might have contributed to aluminium’s high price on Wednesday was the fresh cancelation of 20,775 tonnes of the metal, together with the outflow of 7,125 tonnes, mainly from Port Klang and Johor in Malaysia and Gwangyang in South Korea.
“Although our long-term prognosis on LME aluminium remains bullish, we are somewhat bearish in the short term because the price is starting to look slightly extended on the upside,” said Fastmarkets analyst Andy Farida. “A pullback from recent highs to retest key technical support looks far more likely here due to a confluence of technical resistance."
Elsewhere in the complex, zinc’s three-month price ended Wednesday at $2,747 per tonne, a 2% increase from Tuesday’s closing price, partially due to the collapse of an open pit at a Vedanta-operated zinc mine
in Gamsberg, South Africa, in the early hours of Tuesday.
There were just over 12,000 lots of the galvanising metal exchanged on the LME on Wednesday, also supporting the uptrend in zinc’s three-month price.
Furthermore, LME zinc's benchmark cash/three-month spread narrowed to $5 per tonne contango on Wednesday afternoon, from $15 per tonne contango at the start of the month, with strong forward buying in the galvanizing metal contributing to a softening of the spread.
- Nickel's three-month price decreased to $15,809 per tonne at 5pm on Wednesday, a 0.8% drop from its closing price on Tuesday.
- The US dollar index stood at 92.27 at 5pm on Wednesday, a 0.2% decrease from 92.47 at a similar time on Tuesday.
- Meanwhile in other commodities, the Brent Crude oil price was at $44.67 per barrel at 5pm on Wednesday, a 2.8% rise from $43.45 per barrel at a similar time on Tuesday.
- Similarly, The West Texas Intermediate (WTI) oil price was also on a high on Wednesday evening, trading at $42.13 per barrel, a 2.6% increase from $41.05 per barrel a day earlier.