Base Metals Fell Broadly; SHFE Copper, SHFE Tin, NY Silver, and Polysilicon Dropped More Than 1%, While Ferrous Metals Mostly Rose [SMM Midday Commentary]

SMM News on August 18:

Metals market:

As of the midday close, domestic base metals mostly fell. SHFE copper fell 1.19%, and SHFE aluminum fell 0.35%. SHFE lead rose 0.13%. SHFE zinc fell 0.97%. SHFE tin fell 1.57%. SHFE nickel rose 0.19%.

In addition, the most-traded casting aluminum futures contract fell 0.84%, and the most-traded alumina contract fell 0.26%. The most-traded lithium carbonate contract fell 0.69%. The most-traded silicon metal contract fell 0.92%. The most-traded polysilicon futures contract fell 1.17%.

Ferrous metals mostly rose. Iron ore fell 0.21%, rebar fell 0.27%, and hot-rolled coil rose 0.09%. Stainless steel rose 0.6%. For coking coal and coke: the most-traded coking coal contract rose 0.36%, and the most-traded coke contract rose 1.2%.

Overseas base metals: as of 11:42, LME metals were down nearly across the board. LME copper fell 0.34%, and LME lead rose 0.11%. LME zinc fell 0.59%. LME aluminum and LME tin edged down, with both declines within 0.1%. LME nickel rose 0.42%.

Precious metals: as of 11:42, COMEX gold fell 0.47%, and COMEX silver fell 1.29%. Domestic precious metals: SHFE gold rose 0.15%, and the most-traded SHFE silver contract fell 0.12%.

In addition, as of the midday close, the most-traded platinum futures contract fell 0.18%, and the most-traded palladium futures contract fell 0.61%.

As of the midday close, the most-traded European container shipping contract rose 0.99% to 1,737.5 points.

As of 11:42 on August 18, midday performance of some futures:

Spot and Fundamentals

Copper:Looking ahead to tomorrow, SHFE copper’s absolute price continued to pull back during the day, driving some downstream players to restock on dips and releasing purchase demand from traders. Market transactions improved markedly from yesterday, with standard-quality copper trading relatively smoothly around spot premiums of 350 yuan/mt, providing some support below spot premiums. Overall, with copper prices pulling back to spur the release of rigid demand and the backwardation structure providing support, but high premiums limiting further rush to buy amid continuous price rise, Shanghai spot copper prices against the 2609 contract are expected to remain at a premium tomorrow, with the overall center likely to consolidate around current levels...

Macro Front

China:

[The Ministry of Commerce and other departments jointly issued the “Opinions on Further Stimulating the Vitality of Lower-Tier Markets and Boosting County-Level Consumption”] The Ministry of Commerce and eight other departments released the “Opinions on Further Stimulating the Vitality of Lower-tier Markets and Boosting County-level Consumption,” which proposed accelerating the renovation and upgrading of existing commercial facilities. Supported the upgrading and renovation of traditional department stores and aging shopping centers, and promoted optimized site selection for branded chain stores, discount retailers, and fresh-food e-commerce outlets. Deepened the “1,000 Markets and 10,000 Stores” renovation and enhancement initiative, supported the construction and upgrading of township commercial and trade centers, township (agricultural) trade markets, and distinctive township fairs, and carried out standardized and regulated renovation and construction of new-type convenience stores and village-level integrated parcel and logistics service stations.

[PBOC Reverse Repo Operations Achieved a Net Drain of 95.8 billion yuan on the Day]The PBOC conducted no reverse repo operations today, while carrying out 469.7 billion yuan of overnight reverse repos. As 565.5 billion yuan of overnight reverse repos matured today, a net drain of 95.8 billion yuan was achieved on the day. (Jinshi Data APP)

US dollar:

As of 11:42, the US dollar index rose 0.05% to 99.63. According to CME “FedWatch”: the probability that the US Fed would keep rates unchanged through September was 65%, and the probability of cumulative hikes of 25 basis points was 35%. The probability that the US Fed would keep rates unchanged through October was 51.4%, the probability of cumulative hikes of 25 basis points was 41.3%, and the probability of cumulative hikes of 50 basis points was 7.4%. (Jinshi Data APP)

On Monday local time, US Treasury yields broadly moved higher. The 30-year Treasury yield, typically more sensitive to geopolitical events, rose more than 4 basis points to 5.311%, the highest level since June 2007. The 10-year Treasury yield—the primary benchmark rate for mortgages, auto loans, and credit card debt—rose more than 2 basis points to 4.724%. The 2-year Treasury yield, which typically fluctuates in line with the US Fed’s short-term rate decisions, rose more than 1 basis point on Monday to 4.182%. Oil prices climbed as the 60-day deadline for the peace agreement reached between the US and Iran was set to expire on Monday, and Iran had ruled out the possibility of extending the deadline. Investors were awaiting the release later this week of the minutes of the US Fed meeting to gain further insight into its latest monetary policy decision and the future path of interest rates. At its July 29 meeting, the US Fed voted 9-3 to keep rates unchanged at 3.50% to 3.75%. The three dissenting committee members—Hammack, Kashkari, and Logan—called for a 25-basis-point rate hike.

Reuters poll: Of 104 economists, 94 expected the US Fed to keep the federal funds rate unchanged at 3.50%–3.75% in September (95 held this view in the July survey). Eighty of 104 economists expect the US Fed to keep the federal funds rate unchanged in the 3.50%-3.75% range in 2026 (78 held this view in the July survey).

Recent weak US jobs and retail sales data, along with subdued inflation data, prompted investors to scale back bets on rate hikes. However, Paul Brocardo, CEO of BankPro, noted in a report that if uncertainty over the Middle East situation and the resulting inflation concerns persist, the dollar's downside may be limited. Any escalation in tensions could boost demand for safe-haven assets, thereby supporting the dollar, while also lifting oil prices and driving yields higher. (Jin10 Data APP)

On the Data Front:

Today will see the release of the UK ILO unemployment rate for the three months to June, the UK July unemployment rate, the UK July claimant count, Germany's August ZEW economic sentiment index, the eurozone's August ZEW economic sentiment index, US ADP employment change for the week ended August 1, US July annualized housing starts, US July building permits, US July import price index MoM, US July industrial production MoM, and US July pending home sales index MoM, among others. In addition, Xiaomi Group and Baidu will hold earnings calls.

Crude Oil:

As of 11:42, both crude oil benchmarks were higher, with WTI crude up 0.7% and Brent crude up 0.63%. As prospects for US-Iran peace talks dimmed, market concerns over crude oil supply supported prices.

US President Trump said he has no intention of extending the soon-to-expire agreement with Iran. The US-Iran memorandum of understanding signed in June this year technically expired on Monday. The two sides still have differences on many issues, including the Strait of Hormuz. Other officials suggested that the US is in no rush to end the conflict, which has lasted nearly six months. The US Energy Secretary said the US is playing a long game with the Islamic Republic of Iran, while Trump's senior adviser Kushner said Trump would remain patient on reaching an agreement. (Jin10 Data APP)

US Energy Secretary Wright said measures will be announced in the coming days to help refineries increase fuel production. The US Strategic Petroleum Reserve still has 300 million barrels, and its level after the Iran conflict ends will be higher than before the conflict. (Jin10 Data APP)

Spot Market at a Glance:

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