Metals Declined Across the Board, SHFE Tin Fell Over 3%, SHFE Copper, SHFE Aluminum, and Stainless Steel Led the Decline, SHFE Silver Dropped Over 9% [SMM Midday Review]

SMM May 18 News:

Metals market:

As of the midday close, domestic base metals fell across the board. SHFE copper fell 1.47%. SHFE aluminum fell 1.22%. SHFE lead fell 0.67%, SHFE zinc fell 0.91%. SHFE tin fell 3.26%. SHFE nickel fell 1.17%.

In addition, the most-traded casting aluminum futures fell 1.1%, the most-traded alumina contract fell 0.54%. The most-traded lithium carbonate contract rose 0.12%. The most-traded silicon metal contract fell 0.82%. The most-traded polysilicon futures fell 0.98%.

Ferrous metals mostly fell. Iron ore fell 0.99%, rebar fell 1.02%, hot-rolled coil fell 0.89%, stainless steel fell 1.41%. Coking coal and coke: the most-traded coking coal contract rose 0.12%, the most-traded coke contract fell 0.74%.

Overseas base metals, as of 11:41, LME metals fell across the board. LME copper fell 0.28%. LME aluminum fell 0.63%, LME lead fell 0.2%. LME zinc fell 0.81%. LME tin fell 0.05%. LME nickel fell 0.35%.

Precious metals, as of 11:41, COMEX gold fell 0.59%, hitting an intraday low of $4,483.5/oz; COMEX silver fell 3.34%. Domestic precious metals: the most-traded SHFE gold contract fell 1.61%, the most-traded SHFE silver contract fell 9.38%.

In addition, as of the midday close, the most-traded platinum futures fell 2.36%, the most-traded palladium futures fell 1.92%.

As of the midday close, the most-traded Europe containerized freight index contract rose 3.77%, at 2,590 points.

As of 11:41 on May 18, midday futures quotes for selected contracts:

Spot and Fundamentals

Copper:Today, Guangdong #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at a premium of 260 yuan/mt, down 10 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 180 yuan/mt, down 20 yuan/mt from the previous trading day; SX-EW copper was quoted at a premium of 110 yuan/mt, down 20 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 104,235 yuan/mt, down 1,515 yuan/mt from the previous trading day; the average price of SX-EW copper was 104,160 yuan/mt, down 1,485 yuan/mt from the previous trading day. Spot market: Guangdong inventory increased again today...

Macro Front

China:

[NBS: Industrial Value-added of Enterprises above Designated Size Grew 5.6% in January-April; National Economy Maintained Steady and Progressive Development]From January to April, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments earnestly implemented the decisions and deployments of the CPC Central Committee and the State Council, adhered to the general principle of seeking progress while maintaining stability, fully and faithfully applied the new development philosophy, accelerated the construction of a new development pattern, effectively implemented more proactive macro policies, and focused on stabilizing employment, enterprises, markets, and expectations. Production and supply grew steadily, market sales continued to expand, foreign trade resilience continued to be demonstrated, employment and prices remained generally stable, new growth drivers grew stronger, and high-quality development advanced toward new and better directions. NBS data showed: from January to April, the industrial value-added of enterprises above designated size grew 5.6% YoY. By three major sectors, mining grew 5.5% YoY, manufacturing grew 5.8%, and production and supply of electricity, heat, gas, and water grew 4.5%. Equipment manufacturing value-added grew 8.7% YoY, and high-tech manufacturing value-added grew 12.6%, respectively 3.1 and 7 percentage points faster than overall industrial value-added of enterprises above designated size. By economic type, state-controlled enterprises grew 4.4% YoY; joint-stock enterprises grew 6.0%, foreign-invested and Hong Kong, Macao, and Taiwan-invested enterprises grew 3.9%; private enterprises grew 5.2%. By product, production of 3D printing equipment, lithium-ion batteries, and industrial robots grew 50.9%, 36.0%, and 25.7% YoY respectively. In April, industrial value-added of enterprises above designated size grew 4.1% YoY and 0.05% MoM. In April, the manufacturing PMI was 50.3%; the business activity expectations index was 54.5%, up 1.1 percentage points from the previous month. From January to March, total profits of industrial enterprises above designated size reached 1,696 billion yuan, up 15.5% YoY.

[NBS: In April, New Home Sales Prices in First-Tier Cities Rose MoM; Declines in Second- and Third-Tier Cities Narrowed or Remained Unchanged from the Previous Month]NBS: In April, new home sales prices in first-tier cities rose 0.1% MoM, with the increase narrowing 0.1 percentage points from the previous month. Among them, Shanghai, Guangzhou, and Shenzhen rose 0.4%, 0.1%, and 0.1% respectively, while Beijing fell 0.2%. New home sales prices in second-tier cities fell 0.1% MoM, with the decline narrowing 0.1 percentage points from the previous month. New home sales prices in third-tier cities fell 0.3% MoM, with the decline unchanged from the previous month. Among the 70 large and medium-sized cities, 21 cities saw new home sales prices rise or remain flat MoM, an increase of 5 from the previous month.

[Shenzhen Property Market Remains Hot; Housing Provident Fund Loan Share Rises Significantly]The latest statistics showed that the share of housing provident fund loans rose significantly after the new policy, reflecting from one perspective that the new policy precisely released rigid and improvement-oriented housing demand, market confidence strengthened, and transaction activity remained robust. As of May 17, citywide primary and secondary residential net signings totaled 5,526 units, up 39.2% YoY. (Shenzhen Release)

US dollar:

As of 11:41, the US dollar index rose 0.09%, at 99.34. According to the Financial Times, two US Fed officials nominated by President Trump opposed allowing Powell to serve as interim Fed Chairman "without a time limit." This underscored that political divisions within the central bank are deepening amid the White House's continued attacks on the US Fed. Fed Chairman Powell's second term ended on Friday. Before his formal successor Warsh completes his inauguration, Powell was appointed as interim chairman to carry out duties. Milan and Bowman, nominated by Trump to the Fed's Board of Governors, stated in a joint statement that they supported Powell temporarily serving as interim chairman, but because the arrangement was "without a time limit," they "could not support this action." Milan cast a dissenting vote, while Bowman abstained. Milan and Bowman stated that Powell's interim chairmanship "should be limited to a clear and finite timeframe, at minimum one week," but they "could support a maximum term of one month."

DoubleLine Capital CEO Gundlach said investors will not see an interest rate cut at the next US Fed policy meeting. "People had expected two rate cuts this year, but the inflation market simply isn't cooperating," Gundlach said. "In my view, when the 2-year Treasury yield is nearly 50 basis points above the federal funds rate, it is simply impossible to cut interest rates." Gundlach said newly confirmed Fed Chairman Kevin Warsh is taking office during a "difficult period." Gundlach said: "DoubleLine's model suggests the next CPI reading will start with a '4'." Additionally, according to the CME FedWatch tool: the probability of the US Fed holding rates unchanged through June is 99.2%, with a 0.8% probability of a cumulative 25 basis point cut. The probability of holding rates unchanged through July is 95.0%, with a 0.7% probability of a cumulative 25 basis point cut and a 4.2% probability of a cumulative 25 basis point hike. (Jin10 Data)

Ed Yardeni, president and chief investment strategist at Yardeni Research, said that as investors grow increasingly concerned about inflation, the US Fed needs to keep pace with the bond market or risk losing control over borrowing costs. He noted that given the current market environment is "no longer" suitable for an easing stance, the US Fed should remove its easing bias at the June meeting. "If the Fed fails to remove this bias, investors will conclude that the Fed is falling behind the inflation curve and will demand a higher inflation risk premium," Yardeni said. "We expect the Fed to hold rates unchanged at the June meeting and pivot to a tightening policy stance." Yardeni added that the current economic backdrop no longer justifies an easing bias, let alone rate cuts. Instead, he believes a more hawkish Warsh than the market expects could actually benefit Trump by helping to suppress long-term Treasury yields. (Jin10 Data)

Data:

The US May NAHB Housing Market Index and China's April total electricity consumption YoY (TBD) are scheduled for release today. Also noteworthy: the State Council Information Office will hold a press conference on the national economic performance; the National Energy Administration publishes total electricity consumption data around the 15th of each month; the G7 finance ministers and central bank governors meeting is being held through May 19.

Crude oil:

As of 11:41, both benchmarks rose. WTI crude rose 2.21%, Brent crude rose 1.83%. US-Iran tensions escalated again, with Netanyahu speaking with Trump to "discuss the possibility of resuming military operations against Iran." Trump warned, "Time is running out for Iran, they had better act quickly or they will have nothing left. Time is of the essence!" Brown Brothers Harriman global markets strategy head Elias Haddad judged: "The Strait of Hormuz blockade will continue to be the dominant market driver, as there is no clear resolution in sight and the global oil inventory buffer is shrinking rapidly. Therefore, crude oil prices face further upside risk, which will simultaneously weigh on global bond and equity markets." (Wallstreetcn)

Iraq's new Oil Minister Basim Mohammed Khudair said at a press conference on the 16th that the country exported approximately 10 million barrels of crude oil through the Strait of Hormuz in April, far below the approximately 93 million barrels per month before the US-Israel-Iran conflict erupted. Khudair said Iraq plans to increase the flow through the pipeline connecting Iraq's Kirkuk to Turkey's Ceyhan port to boost exports. However, if the war does not end, Iraq's crude oil exports cannot return to pre-war levels. Iraq plans to engage in dialogue and cooperation with OPEC to enhance the country's export capacity. (Jin10 Data)

In addition, Ukraine's Security Service said Ukraine struck a refinery and two oil pumping stations in Russia's Moscow region. Furthermore, a latest opinion poll in Japan showed that 70% of Japanese citizens believe the government should call for energy-saving measures in the face of crude oil undersupply. Recently, Japan's crude oil imports plummeted, and the country has released strategic petroleum reserves twice, sparking widespread concern. Kyodo News conducted a telephone survey from the 16th to the 17th, asking the public about crude oil and derivative supply shortages. The survey results released on the 17th showed that 70.5% of respondents said the Japanese government should call for measures to conserve energy and resources. Regarding naphtha, a key raw material for producing plastics, 70.6% of respondents said they "feel uneasy" due to supply shortages. (Jin10 Data)

Spot Market Overview:

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