Today, SMM's 10:00 am price for the SGE Ag (T+D) was 15,584 yuan/kg, with premiums quoted at TD -5 to +5 yuan/kg and a weighted average price of 0.63 yuan/kg.
On the macro front, the US September services PMI climbed to a near five-year high, and the manufacturing PMI rose to a more than four-year high. Coupled with input costs accelerating due to rising oil prices, market concerns over further Fed rate hikes re-emerged. After the data release, the market's expectation for at least a 25 bp rate hike at the Fed's October meeting rose to about 75% from about 53% before the data. Geopolitically, the Iranian president stressed at the UN General Assembly that Iran would not accept threats from major powers, and US representatives walked out midway. Iran said it was in no rush to negotiate, that the opening of the Strait of Hormuz required its conditions to be met, and questioned whether the foreign minister's contact with the US envoy was unauthorized. Overall, Iran continued to exert external pressure, regional tensions showed no signs of easing, and precious metals fell under pressure today.
In the spot market, driven by stockpiling demand ahead of the dual holidays this week, downstream consumption recovered somewhat, and transactions improved at one point. Shipments were relatively heavy on early-week orders, but as stockpiling orders were settled and exited, inquiries weakened slightly yesterday, with market quotes concentrated at parity against TD and transactions turning softer. Today, silver prices declined, downstream inquiries remained stable, and holiday sentiment was strong. In the Shanghai region, morning quotes were at discounts of 25-20 yuan/kg against the most-traded SHFE 2610 contract and 65-60 yuan/kg against SHFE 2612.
Overall, strong US economic data raised the probability of an October rate hike, and combined with escalating US-Iran tensions, this weighed on precious metals. Today's transactions were concentrated near parity against the SGE Ag (T+D).
