Given the volatility rising due to the Middle East crisis and the temporary closure of the Strait of Hormuz, the London Metal Exchange (LME) aluminium prices seem to be high one day but again trembling on the other. March 23 saw such a time, where the LME aluminium prices, including the longer-dated contracts, fell from the previous day’s close.
On March 23, both the LME cash bid and offer dipped by USD 77.5 per tonne or 2.3 per cent, where the bid reached USD 3,251 per tonne from USD 3,328.5 per tonne and the offer to USD 3,251.5 per tonne from USD 3,329 per tonne.
In his LinkedIn Newsletter, Jorge Eduardo Dyszel, London Metal Exchange trainer and risk management consultant, explained aluminium prices declined rapidly in a vertical move, amplified by margin calls and thin liquidity, with aluminium adjusting lower in parallel.
At the 3-month forward contracts, the LME bid fell by USD 67 per tonne, from USD 3,287 per tonne to USD 3,220 per tonne and the offer from USD 3,287.5 per tonne to USD 3,222 per tonne, both reflecting a difference of 2 per cent.
Concerning the longer dated contracts, both the LME December 27 bid and offer declined by USD 22 per tonne or 1 per cent, where the bid shifted from USD 2,995 per tonne to USD 2,973 per tonne and the offer from USD 3,000 per tonne to USD 2,978 per tonne.
The 3-month Asian Reference Price on March 23 stood at USD 3,199 per tonne, changing from USD 3,215 per tonne, owing to a difference of USD 16 per tonne or 0.5 per cent.
At the inventory level, the LME opening stock contracted to 432,725 tonnes on March 23, from 429,675 tonnes, reflecting a change of 3,050 tonnes or 1 per cent. The live warrants remained unchanged from the previous day’s close and are still at 273,050 tonnes. The cancelled warrant shifted from 154,625 tonnes to 156,625 tonnes, showing a shift of 2,000 tonnes or 1.3 per cent.
The LME alumina platts also changed from USD 305.23 per tonne to USD 304.91 per tonne, meaning a shift of USD 0.32 per tonne or 1 per cent.