The US dollar continued to fall, and metal prices rose. Lithium carbonate increased by 3.39%, while European shipping futures fell by 4.88% 【SMM Daily Report】 Metal Market: Due to the recent continuous decline of the US dollar, metal futures rose today. As of the end of today's daytime trading, prices of domestic basic metals fluctuated. Shanghai zinc rose by 1.27%, Shanghai aluminum and lead rose by 0.40% and 0.44% respectively, while other metals fell by less than 1.00%. As of 15:15 today, LME metals were all up, with London zinc rising by 1.66% and other metals rising by less than 1.00%. Lithium carbonate and industrial silicon rose by 3.39% and 0.38% respectively. Black metal products all saw an increase, with coke rising by 2.11%, rebar by 1.62%, hot coil by 1.42%, and iron ore by 1.24%, stainless steel by 1.11%. Shanghai gold rose by 0.11%, while Shanghai silver fell by 0.51%. As of 15:15 today, COMEX gold and silver both rose by 0.22%. European shipping futures continued to fall, with a drop of 4.88% today, marking the second consecutive day of decline. Although the recent performance of gold prices has been impressive, further upward movement is limited. Analysts at Macquarie pointed out that expectations for a rate cut by the Fed in March were too high at the beginning of this year. Currently, the pricing of Federal Fund futures indicates a balanced risk with three to four 25 basis point rate cuts from June. Macquarie stated that gold's recent strong performance may be due to strong physical demand, but considering the inverse relationship between price and physical demand changes, it is unlikely to drive up prices in the short term. Instead, the macroeconomic financial background later this year will be more favorable, thus pushing gold prices to new highs. Spot and fundamentals In terms of stainless steel, the approval process for Indonesia's RKAB mine has slowed down, resulting in concerns about the supply of ferro-nickel raw materials. This has led to an increase in prices, as well as a shortage of stainless steel scrap materials after the holiday. As a result, the cost and prices of stainless steel have rebounded recently, and stainless steel futures have also rebounded continuously. After a brief adjustment yesterday, stainless steel futures rose today. As for lithium carbonate, the overall resumption of work at the salt end has been slow after the Chinese New Year. Market demand is expected to gradually warming up in the second quarter, with minimal risk of inventory price loss. More strategies to maintain prices and sell scattered orders are expected. Macroeconomic perspective In terms of the US dollar, the US dollar index continued to fall, dropping by 0.1% as of 15:55. Recent US economic data shows that there is not a strong urgency for the Federal Reserve to cut interest rates. In addition, several Fed officials are concerned about the rebound in inflation and are hesitant to cut rates too early. The former US Treasury Secretary, Summers, and several Wall Street investment banks have even called for an increase in interest rates. This has led to a continuous revision of previous expectations for a rate cut. According to CME "Fed Watch", the probability of the Fed maintaining interest rates in the 5.25%-5.50% range in March is 97.5%, while the probability of a 25 basis point rate cut is 2.5%. In May, the probability of maintaining interest rates is 85.0%, with a cumulative probability of a 25 basis point rate cut at 14.6%, and a cumulative probability of a 50 basis point rate cut at 0.3%. Crude oil: As of 15:15 today, US oil and Brent oil rose by around 0.20%. There is currently no further news stimulation from a geopolitical perspective. The main focus on the supply side is OPEC's guidance on production policies for the next quarter in early March. Currently, OPEC's compliance with the 2024 production reduction plan has been good, with cuts in January reaching over 60%. In early March, OPEC will decide whether to extend the policy of cutting crude oil production by approximately 200,000 barrels per day to the second quarter. Expectations of a contraction in refined oil supply in the market have boosted the oil market. Western countries have once again imposed multiple new sanctions on Russia, and yesterday Russian Prime Minister Mikhail Mishustin approved a six-month ban on gasoline exports, which is favorable for the recent weak performance of the refined oil market. However, demand still depends on the economic recovery of China and the United States. Previously, the contradiction in refined oil was prominent, overseas gasoline and diesel cracking remained weak but stable, at a neutral level, in line with seasonal trends. Refined oil demand is expected to be weak in the typical weak season of March-April, and attention should be paid to the level of overseas refinery maintenance.
For more information contact Gina Wen: ginawen@smm.cn
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