Crude Oil Rose, Metals Saw Overseas Market Outperform Domestic Market, Lithium Carbonate, Polysilicon, and Coke Fell Over 1%, Coking Coal Fell Over 3% [SMM Midday Review]

SMM News, May 22:

Metals market:

As of the midday close, base metals on the domestic market mostly fell. SHFE copper fell 0.19%. SHFE aluminum fell 0.1%. SHFE lead rose 0.54%, and SHFE zinc edged up. SHFE tin rose 0.09%. SHFE nickel fell 0.59%.

In addition, the most-traded casting aluminum futures fell 0.11%, and the most-traded alumina contract rose 0.04%. The most-traded lithium carbonate contract fell 1.28%. The most-traded silicon metal contract fell 0.59%. The most-traded polysilicon futures fell 1.38%.

Ferrous metals mostly fell. Iron ore rose 0.19%, rebar fell 0.38%, hot-rolled coil fell 0.76%, and stainless steel rose 0.4%. Coking coal and coke: the most-traded coking coal contract fell 3.07%, and the most-traded coke contract fell 1.78%.

Overseas base metals, as of 11:41, LME metals mostly rose. LME copper fell 0.06%. LME aluminum rose 0.15%, and LME lead edged up. LME zinc rose 0.35%. LME tin rose 0.34%. LME nickel rose 0.16%.

Precious metals, as of 11:41, COMEX gold fell 0.43%, and COMEX silver fell 0.33%. Domestic precious metals: the most-traded SHFE gold contract fell 0.13%, and the most-traded SHFE silver contract rose 0.61%.

In addition, as of the midday close, the most-traded platinum futures rose 0.34%, and the most-traded palladium futures rose 0.57%.

As of the midday close, the most-traded Europe containerized freight index contract rose 4.51%, closing at 3,032.5 points.

As of 11:41 on May 22, midday futures quotes for selected contracts:

Spot and Fundamentals

Copper:Today in Guangdong, #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at a premium of 210 yuan/mt, down 30 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 140 yuan/mt, down 25 yuan/mt from the previous trading day; SX-EW copper was quoted at a premium of 70 yuan/mt, down 20 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 104,570 yuan/mt, down 955 yuan/mt from the previous trading day, and the average price of SX-EW copper was 104,465 yuan/mt, down 950 yuan/mt from the previous trading day...

Macro Front

Domestic:

[NDRC: Supply-demand relationship is expected to further improve, and prices are expected to continue operating within a stable range]Li Chao, deputy director of the Policy Research Office of the National Development and Reform Commission (NDRC), stated that prices in April continued the mild rebound trend since H2 last year, releasing positive signals of improving supply-demand relationship and optimized market order. Although the trajectory of international energy prices remains uncertain, China has a solid foundation for maintaining overall price stability. As a series of macro policies are further implemented, the supply-demand relationship is expected to further improve, and prices are expected to continue operating within a stable range.

[NDRC: During the 15th Five-Year Plan period, investment of over 5 trillion yuan is expected for new-type power grid construction] The CPC Central Committee Political Bureau meeting proposed strengthening the planning and construction of "six networks," including water networks, new-type power grids, computing power networks, next-generation communication networks, urban underground pipeline networks, and logistics networks. On May 22, the NDRC held a press conference. At the conference, Li Chao, deputy director of the Policy Research Office of the NDRC, stated that during the 15th Five-Year Plan period, investment of over 5 trillion yuan is expected to be allocated for the planning and construction of a number of power transmission corridors and inter-provincial power supply projects, optimizing ultra-high voltage and extra-high voltage AC networks by layer and zone, and implementing a number of urban distribution network renewal projects, weak-area grid renovation projects, and rural grid frequent outage remediation projects. Li Chao stated that based on comprehensive analysis, the national peak electricity load this summer is expected to reach approximately 1.6 billion kW, an increase of about 90 million kW YoY, equivalent to adding the electricity load of an entire Henan Province.

[NDRC: Guiding domestic large AI models to step up efforts in adapting to domestically produced computing chips] Li Chao, deputy director of the Policy Research Office of the NDRC, stated at a press conference on May 22 that core technologies and application demand in the artificial intelligence sector are both showing rapid growth trends. China has consistently adhered to systematic planning, sector-specific policies, open sharing, and secure controllability, promoting the broad and deep integration of artificial intelligence with all industries and sectors of the economy and society, guiding domestic large AI models to step up efforts in adapting to domestically produced computing chips, and ensuring independent controllability, development for good, and steady long-term progress while maintaining rapid development, so that all people can share the fruits of AI development. This is also a prominent feature of China's AI development.

The PBOC conducted 153 billion yuan of 7-day reverse repo operations in the open market at an operation rate of 1.40%, unchanged from the previous day. Today, 500 million yuan of reverse repos matured.

US dollar:

As of 11:41, the US dollar index rose 0.05%, at 99.25. The White House said: The swearing-in ceremony for new Fed Chairman Warsh will be held at 11:00 AM on May 22 (23:00 Beijing time). US Fed's Barkin stated that the ability of businesses and consumers to absorb the latest round of supply shocks will determine whether the US central bank can continue to "look through" higher inflation without choosing to raise interest rates. In remarks prepared for a speech in Raleigh, North Carolina, on Thursday, Barkin said: "After inflation has been above our 2% target for more than five consecutive years, it is worth considering whether the cumulative effect of so many rounds of shocks could cause the 'anchor' of inflation expectations to loosen." He also said: "For me, the key question is how much more pressure businesses, consumers, and inflation expectations can withstand." Barkin also said he is increasingly concerned that the US may have entered a "new phase" in which supply shocks will become more frequent. These shocks could stem from multiple factors, including heightened geopolitical tensions, fragmentation of the trade system, more extreme weather events, rising government debt, and other structural forces. He also noted that, for now, the US Fed's monetary policy stance is "in a good place" to address risks on both the employment and inflation fronts.

According to CME FedWatch: The probability of the US Fed keeping rates unchanged through June was 96.8%, with a 3.2% probability of a cumulative 25-basis-point rate hike. The probability of keeping rates unchanged through July was 85.4%, with a 14.2% probability of a cumulative 25-basis-point rate hike and a 0.4% probability of a cumulative 50-basis-point rate hike. In addition, Nomura Securities expects the US Fed to keep rates unchanged in 2026, having previously forecast interest rate cuts in September and December this year. (Jin10 Data)

Data:

Data to be released today include: US University of Michigan consumer sentiment index final for May, US one-year inflation expectations final for May, US Conference Board leading index MoM for April; UK GfK consumer confidence index for May, UK public sector net borrowing for April, UK seasonally adjusted retail sales MoM for April; Germany GfK consumer confidence index for June, Germany Q1 non-seasonally adjusted GDP YoY final, Germany IFO business climate index for May; Japan core CPI YoY for April; and Canada retail sales MoM for March.

In addition, 2027 FOMC voter and Richmond Fed President Barkin will deliver a speech, and US Fed Governor Waller will deliver a speech.

Crude oil:

As of 11:41, both benchmarks rose. WTI crude rose 1.21%, and Brent crude rose 1.7%. The volatile US-Iran situation affected oil price movements, with market concerns over whether US-Iran negotiations could make progress supporting oil prices.

Four sources said that seven major OPEC+ producing countries will most likely agree to a modest increase in the July production target when they meet on June 7, even though supply from several of them remains disrupted by the Iran war. Sources said the monthly production target set by the seven core OPEC+ members is expected to be raised by approximately 188,000 barrels per day. In Q1 2026, OPEC+ maintained production unchanged, but since April, the group has raised production targets monthly despite the ongoing war. However, since the UAE's exit from the group in May, the monthly production increase has been reduced. Analysts and delegates believe that while the UAE's departure weakened the group's influence over the market, it may have strengthened its internal cohesion. In addition, sources said two other OPEC+ meetings scheduled for June 7 are not expected to make any policy adjustments.

IEA Executive Director Birol said on Thursday that the arrival of peak summer fuel demand, combined with the lack of new oil exports from the Middle East and continued inventory drawdowns, could push the oil market into a "danger zone" from July to August, but he did not elaborate further. In his speech, Birol said the world was in a state of oil surplus when the oil supply crisis triggered by the Iran war broke out, which helped cushion the impact, but inventories are now steadily declining. (Jin10 Data)

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