Crude oil falls for four consecutive sessions, metals broadly rise, LME copper approaches historical highs, NY silver up 1%, alumina down nearly 2% [SMM Noon Review]

SMM August 26 news:

Metal market:

As of noon close, domestic base metals were mostly up. SHFE copper rose 0.97%, SHFE aluminum rose 0.29%, SHFE lead rose 0.31%, SHFE zinc rose 0.94%, SHFE tin rose 0.35%, and SHFE nickel edged down.

Additionally, the most-traded aluminum casting futures rose 0.3%, the most-traded alumina futures fell 1.97%, the most-traded lithium carbonate futures fell 0.35%, the most-traded silicon metal futures rose 0.69%, and the most-traded polysilicon futures rose 0.99%.

Ferrous metals showed mixed performance. Iron ore rose 0.56%, rebar rose 0.23%, hot-rolled coil fell 0.15%, stainless steel rose 0.57%. Coking coal and coke: the most-traded coking coal contract fell 0.66%, and the most-traded coke contract fell 2.28%.

Overseas base metals, as of 11:42, LME metals were mostly up. LME copper rose 0.62%, hitting an intraday high of $14,437.5/mt, approaching the historical record of $14,527.5/mt. LME aluminum fell 0.22%. LME lead and LME zinc both rose within 0.4%. LME tin rose 0.19%. LME nickel fell 0.15%.

Precious metals, as of 11:42, COMEX gold rose 0.26%, COMEX silver rose 1%. Domestic precious metals: SHFE gold fell 0.24%, and the most-traded SHFE silver contract rose 0.64%.

Additionally, as of noon close, the most-traded platinum futures fell 0.01%, and the most-traded palladium futures fell 0.67%.

As of noon close, the most-traded container shipping (EC) contract fell 5.19% to 1,845.4 points.

As of 11:42 on August 26, partial futures noon quotes:

Spot Market and Fundamentals

Copper:Today in Guangdong, spot prices against the front-month contract for #1 copper cathode: high-quality copper reported a premium of 250 yuan/mt, unchanged from the previous trading day; standard-quality copper reported a premium of 160 yuan/mt, up 10 yuan/mt from the previous trading day; SX-EW copper reported a premium of 100 yuan/mt, up 10 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 109,205 yuan/mt, up 700 yuan/mt from the previous trading day; the average price of SX-EW copper was 109,100 yuan/mt, up 705 yuan/mt from the previous trading day. Spot market: Inventory in Guangdong has fallen for seven consecutive days, with reduced arrivals being the main reason...

Macro Front

Domestic:

[China to Promote 6G Industry Maturity and Ecosystem Building During 15th Five-Year Plan Period] Liu Yulin, Director of the Information and Communications Development Department of the Ministry of Industry and Information Technology, said at a press conference themed "A Good Start to the 15th Five-Year Plan" held by the State Council Information Office on August 26 that during the 15th Five-Year Plan period, China will accelerate the core technology research of 6G, continue to conduct 6G technology trials and standards development, promote 6G industry maturity and ecosystem building, and prepare for 6G commercial use. Xinhua News Agency)

[MIIT: China to Cultivate and Build 500 Zero-Carbon Factories During the 15th Five-Year Plan Period] The State Council Information Office held a press conference themed "Getting Off to a Good Start in the 15th Five-Year Plan," during which a relevant official from the Ministry of Industry and Information Technology (MIIT) introduced efforts to fully implement the 15th Five-Year Plan and accelerate the advancement of new-type industrialization. The press conference stated that during the 15th Five-Year Plan period, China will cultivate and build 500 zero-carbon factories, creating a batch of replicable and scalable construction models. (CCTV News)

[MIIT: Deepen AI Application in Material R&D and Production Processes, Accelerate Green and Low-Carbon Technology Breakthroughs Such as Hydrogen Metallurgy] Yao Jun, Director of the Planning Department of MIIT, said at a press conference held by the State Council Information Office on August 26 that during the 15th Five-Year Plan period, the high-quality development of the raw material industry will be promoted. First, optimize and upgrade the industrial structure, with the core focus on promoting adaptation and enhancing capacity. Promoting adaptation means deeply addressing capacity governance in key industries such as steel and cement, strictly implementing capacity replacement policies, conducting dynamic risk early warnings for capacity of key products, optimizing industrial layout, and channeling resources toward advanced capacity to achieve a "two-way alignment" of supply and demand. Second, strengthen the security of resource industries, with the core focus on stabilizing supply and improving quality. Stabilizing supply means actively advancing core technology breakthroughs in efficient mining, beneficiation, and smelting for scarce resources, strengthening comprehensive utilization of low-grade, associated, and difficult-to-treat ores, as well as solid waste, and enhancing the sustainability of resource security through "expanding sources," "conserving resources," and "recycling." Third, lead the innovative development of advanced materials industries, with the core focus on tracking frontier developments and addressing pain points. (Jin10 Data APP)

[PBOC Reverse Repo Operations Achieve Net Injection of 239.5 Billion Yuan Today] The PBOC conducted 239.5 billion yuan of 7-day reverse repo operations today, and with no reverse repo maturing today, it achieved a net injection of 239.5 billion yuan. (Jin10 Data APP)

US Dollar:

As of 11:42, the US dollar index rose 0.05% to 98.96. US Fed's Barkin stated that if US debt continues to climb, a "reckoning" will ultimately occur, though it is difficult to predict when this will happen. When asked about the total US public debt exceeding $40 trillion, Barkin said the government can continue borrowing as long as the public keeps buying government bonds. However, he added that investor sentiment might begin to show resistance. Barkin said: "As things develop, a reckoning will eventually face that."No one could predict the exact timing, but we have a global currency and rule of law — these are the reasons people keep buying our debt. But you know, one day, people will stop buying your debt, and that is the risk we currently face." Additionally, Barkin reiterated remarks he made earlier this month about keeping interest rates steady given evidence of declining inflation, though he acknowledged that policymakers might have to raise rates if price pressures become entrenched.

The discount rate meeting minutes released by the Fed on Wednesday morning showed that boards of four of the 12 regional Fed banks voted to raise the rate charged on emergency loans to commercial banks days before the Fed's July meeting. The Fed's FOMC voted 9-3 at its July 28-29 meeting to keep the policy rate unchanged, further highlighting the internal controversy over the decision. The boards of the Dallas Fed, Cleveland Fed, Minneapolis Fed, and Kansas City Fed voted to raise the primary credit rate by 25 basis points. The presidents of the first three regional banks voted against keeping rates unchanged at the July policy meeting, while Kansas City Fed President Schmid lacks voting rights this year. Regional Fed bank directors are not monetary policymakers and do not set the Fed's interest rates, but they meet regularly with their respective regional Fed presidents. The regional Fed presidents stated that directors' views help shape their own economic and policy outlooks. Regional Fed boards vote on the discount rate at regular meetings, but the rate is ultimately set by the Fed's Board of Governors and kept in line with the upper end of the policy rate target range. Since last December, the Fed's policy rate target range has remained at 3.5%-3.75%. (Jin Shi Data APP)

According to the CME's "FedWatch," the probability of the Fed keeping rates unchanged through September is 60.4%, and the probability of a cumulative 25-basis-point hike is 39.6%. The probability of the Fed keeping rates unchanged through October is 45.7%, with a 44.7% probability of a cumulative 25-basis-point hike and a 9.7% probability of a cumulative 50-basis-point hike.

A research report from CITIC Securities stated that Fed Chairman Walsh will deliver a keynote speech at the Jackson Hole conference this Friday. Against the backdrop of persistently high long-term U.S. Treasury yields and the short-lived effectiveness of repo announcements, his speech has become one of the few potential trading anchors for the market in the near term. This serves as a window to test Walsh's communication skills, and we believe he will seize this opportunity to repair his credibility, possibly requiring adjustments to his previously "completely vague" communication strategy. We will focus on its content regarding policy transparency, which is more important than the traditional "hawkish" or "dovish" stances.

Data:

Today, the following data are released: US July Core PCE Price Index YoY, US July Personal Spending MoM, US Q2 Real GDP Annualized QoQ Revised, US July Core PCE Price Index MoM, US July Durable Goods Orders MoM, Australia July Unadjusted CPI YoY, Switzerland August ZEW Investor Confidence, and UK August CBI Retail Sales. In addition, attention should be paid to: 2027 FOMC voter, Richmond Fed President Thomas Barkin attending a panel discussion.

Crude oil:

As of 11:42, crude oil prices on both exchanges continued the decline of the previous three trading days, with WTI crude falling 2.56% and Brent crude falling 2.43%. The US-Iran ceasefire negotiations and the Iran-Oman plan for the Strait of Hormuz reported major progress, putting oil prices under pressure.

According to the latest report from Xinhua News Agency, Iran and Oman issued a joint statement on the 25th, proposing to establish a mutually agreed safe maritime passage in the Strait of Hormuz.According to the statement, the proposed framework includes establishing a mutually agreed safe shipping corridor in the Strait of Hormuz, reaching common arrangements for the corridor's operation, establishing a coordination mechanism involving the coast guards of both countries, and continuing coordination on the future management of the Strait of Hormuz, information exchange, traffic management, and related navigation and safety services.

Meanwhile, according to Russian media Sputnik citing sources from the Pakistani military and Iranian security departments, the US and Iran have reached a consensus on the terms of a ceasefire agreement, which includes free navigation through the Strait of Hormuz.Sources said that the US and Iran are expected to announce the relevant news in the coming days and start negotiations and technical meetings based on the previously brokered Islamabad Memorandum of Understanding (MoU) mediated by Pakistan. (Wall Street Sights)

Spot Market Overview:

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