Base metals broadly rise, SHFE silver surges over 3%, lithium carbonate drops more than 4%, coking coal and coke and iron ore lead the decline [SMM midday comment]

SMM, July 21 –

Metal market:

As of the midday close, base metals on the domestic market rose broadly. SHFE tin rose 0.77%. SHFE copper rose 0.99%, while SHFE aluminum fell 0.34%. SHFE zinc rose 0.27%. SHFE lead edged down, and SHFE nickel edged up.

Additionally, the most-traded casting aluminum futures contract fell 0.3%, the most-traded alumina contract rose 0.78%, the most-traded lithium carbonate contract fell 4.45%, the most-traded silicon metal contract fell 0.36%, and the most-traded polysilicon futures contract rose 0.22%.

Ferrous metals mostly fell. Iron ore fell 1.39%, while rebar and hot-rolled coil fell 0.84% and 0.73% respectively. Stainless steel rose 0.48%. Coking coal and coke: the most-traded coking coal contract fell 2.58%, and the most-traded coke contract fell 2.76%.

Overseas base metals, as of 11:44, LME metals all rose. LME copper rose 0.14%, LME aluminum rose 0.51%, and LME lead rose 0.45%. LME zinc and LME tin rose 0.6% and 0.35% respectively. LME nickel rose 0.59%.

Precious metals, as of 11:44, COMEX gold rose 0.83%, and COMEX silver rose 1.61%. Domestic precious metals: SHFE gold rose 1.03%; the most-traded SHFE silver contract rose 3.27%.

Additionally, as of the midday close, the most-traded platinum futures contract rose 1.03%, and the most-traded palladium futures contract rose 1.53%.

As of the midday close, the most-traded European route shipping contract fell 0.73% to 2,792 points.

As of 11:44 on July 21, midday futures market conditions:

Spot and fundamentals

Silver: US-Iran ceasefire negotiations showed a turning point; silver saw a technical rebound but lacked substantial positive catalysts, with limited rebound strength. The spot market experienced weak supply and demand, deals were near parity, and wait-and-see sentiment was strong...

Macro front

China:

[Ministry of Transport: 15th Five-Year Plan period to focus on promoting low-carbon substitution in transport power and advancing green transformation of transport infrastructure] Cai Tuanjie, Director-General of the Safety Supervision Department and concurrently head of the Transport Services Department of the Ministry of Transport, stated at a State Council Information Office press conference that during the 15th Five-Year Plan period, the country will vigorously promote low-carbon substitution of transport power, advance the green transformation of transport infrastructure, accelerate the optimization and adjustment of the transport structure, continue to deepen pollution prevention and control efforts, improve the carbon emission statistics, accounting, and monitoring system for transportation, and with greater efforts drive the green and low-carbon transformation in the transport sector, laying a solid foundation for building a strong transport country and a beautiful China. (Jin10 Data APP)

[China to Allocate 22 Billion Yuan to Support Retirement and Renewal of Old Operating Trucks] On July 21, Cai Tuanjie, Chief Safety Officer and Director-General of the Department of Transport Services at the Ministry of Transport, said at a State Council Information Office press conference that China will continue to implement the campaign for the retirement and renewal of old operating trucks in 2026, allocating 22 billion yuan from ultra-long special government bonds to support this effort, with a focus on replacing them with new energy heavy-duty trucks, and to step up efforts to boost consumption in the new energy heavy-duty truck market through the program of large-scale equipment upgrades and consumer goods trade-ins. (Xinhua News Agency)

[China to Build Over 3,000 Charging and Battery Swapping Stations for Electric Heavy-Duty Trucks] On July 21, Cai Tuanjie, Chief Safety Officer and Director-General of the Department of Transport Services at the Ministry of Transport, said at a State Council Information Office press conference that, with a focus on busy freight sections of national expressways and regular national and provincial highways, city clusters and metropolitan areas such as the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Chengdu-Chongqing region, as well as key nodes like freight hubs, ports, mining areas, factory zones and industrial parks, China plans to build over 3,000 charging and battery swapping stations for electric heavy-duty trucks, advancing the networking of energy replenishment facilities by connecting points to form lines and networks. (Xinhua News Agency)

[PBOC Achieves Net Injection of 16.5 Billion Yuan via Reverse Repo Operations Today] The PBOC conducted 253 billion yuan in 7-day reverse repo operations today. With 236.5 billion yuan of reverse repos maturing today, this resulted in a net injection of 16.5 billion yuan for the day.

On the dollar side:

As of 11:44, the US dollar index was flat at 100.97. "Fed Whisperer" Nick Timiraos: Based on estimates that convert PPI and CPI data into PCE terms, U.S. core PCE for June is expected to rise mildly by 0.18% (up 3.3% YoY), which would mark the lowest monthly increase since November last year. The overall PCE for June is expected to decline 0.07%, bringing the 12-month YoY increase down to 3.7%. According to the CME "FedWatch": The probability of the Fed keeping rates unchanged in July is 84.5%, while the probability of a cumulative 25-basis-point rate hike is 15.5%. The probability of unchanged rates by the September meeting is 36%, that of a cumulative 25bp hike is 55.1%, and that of a cumulative 50bp hike is 8.9%.

On other currencies:

A forex strategist at Commerzbank said that, given escalating tensions in the Middle East and rising energy prices, the euro should benefit if the European Central Bank strongly signals its willingness to raise rates further. The ECB is expected to keep rates unchanged this week but to hike again in September. If the U.S.-Iran conflict escalates further, how clearly the ECB signals its readiness to continue raising rates beyond September will be a decisive factor in limiting downside room for EUR/USD. Mitsubishi UFJ strategists noted that a consecutive rate hike by the European Central Bank this week was highly unlikely, with even hawkish officials such as Bundesbank President Joachim Nagel indicating a preference for holding rates steady. The continued rebound in energy prices supports expectations for a further 25bp hike in September. Eurozone interest rate markets have almost fully priced in two more ECB rate hikes by year-end, pushing short-term rates back near their highs for the year. Softer US inflation data has weakened the impact of rising energy prices on expectations for US Fed interest rate tightening, shifting the price spread in favor of the euro. (Jin10 Data APP)

Data-wise:

On the day, data including Switzerland's June trade balance, the UK's May ILO unemployment rate for the three months to May, UK June public sector net borrowing, UK June unemployment rate, UK June claimant count change, Germany's July ZEW economic sentiment index, the Eurozone's July ZEW economic sentiment index, and the US weekly ADP employment change for the week ending July 4 are due for release.

Crude Oil:

As of 11:44, both oil benchmarks traded lower, with WTI down 0.34% and Brent down 0.68%. Market hopes for US-Iran conflict negotiations weighed on oil prices.

Despite a pullback on Tuesday, Middle East tensions remained a potential market disruption. Threats from Houthi forces to blockade Red Sea export routes kept the market focused on whether Saudi Arabian exports would be impacted. BlackRock strategists believe there is currently no evidence that an escalation in the Middle East would cause a severe enough shock to economic growth to alter the market's risk appetite stance. (Wall Street CN)

Spot Market Roundup:

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