US dollar declines, LME outperforms SHFE, LME tin rises over 3%, silicon metal and polysilicon fall over 2% [[SMM Daily Review]]

SMM News on May 6:

Metal Market:

As of the daytime close, most domestic base metals closed lower, with only SHFE copper and SHFE nickel rising together. SHFE copper rose by 0.06%, and SHFE nickel rose by 0.48%. SHFE aluminum led the declines with a 1% drop, while SHFE lead fell by 0.92%. The main alumina contract fell by 1.94%.

In addition, the main lithium carbonate contract fell by 1.51%, the main silicon metal contract fell by 2.57%, and the main polysilicon contract fell by 2.39%. The main European container shipping contract rose by 0.1%.

In the ferrous metals series, most prices fell. Iron ore remained flat at 704.5 yuan/mt, while stainless steel rose by 0.43%. Rebar fell by 0.61%, and HRC fell by 0.19%. In the coking coal and coke segment, coking coal fell by 1.73%, and coke fell by 2.88%.

In the overseas market, as of 15:06, overseas metals collectively rose, with LME tin leading the gains with a 3.51% increase. LME zinc and LME nickel both rose over 1%, with LME zinc up 1.51% and LME nickel up 1.26%. LME copper rose by 0.86%. The remaining metals all rose slightly.

In precious metals, as of 15:06, COMEX gold rose by 1.53%, and COMEX silver rose by 2.27%. Domestically, SHFE gold rose by 1.39%, while SHFE silver fell by 0.04%.

Market conditions as of 15:06 today

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Macro Front

Domestic Aspects:

[Domestic tourists reached 314 million during this year's Labour Day holiday, up 6.4% YoY] During the 2025 Labour Day holiday, various regions launched a diverse array of tourism products, cultural activities, and people-friendly initiatives to meet the diverse and personalized needs of the public. According to calculations by the data center of the Ministry of Culture and Tourism, a total of 314 million domestic trips were made nationwide during the five-day holiday, up 6.4% YoY. The total expenditure of domestic tourists reached 180.269 billion yuan, up 8.0% YoY.

[Inbound and outbound travel during this year's Labour Day holiday reached 10.896 million person-times, up 28.7% YoY] According to the National Immigration Administration, during this year's Labour Day holiday, border control authorities nationwide facilitated a total of 10.896 million inbound and outbound trips by Chinese and foreign nationals, with a daily average of 2.179 million person-times, representing a 28.7% increase compared to the same period last year. The peak single-day inbound and outbound traffic occurred on May 3, reaching 2.297 million person-times. Among them, 5.778 million inbound and outbound trips were made by mainland residents, up 21.2% YoY; 4.003 million trips were made by Hong Kong, Macao, and Taiwan residents, up 37.1% YoY; and 1.115 million trips were made by foreign nationals, up 43.1% YoY. Among the inbound foreign nationals, 380,000 entered under visa-free policies, up 72.7% YoY. A total of 456,000 inbound and outbound transportation vehicles (including aircraft, ships, trains, and vehicles) were inspected, up 18.1% YoY.

[Caixin China Services PMI for April fell to 50.7] The Caixin China General Services Business Activity Index (Services PMI) for April, released today, stood at 50.7, down 1.2 percentage points from March, marking the lowest level in seven months while remaining in expansion territory.

► The central parity rate of the RMB against the US dollar in the interbank foreign exchange market as of 15:06 today was 7.2008 yuan per US dollar.

US Dollar Aspects:

As of 15:06, the US dollar index fell by 0.09%. Data released by the Institute for Supply Management (ISM) on Monday showed that the US ISM Non-Manufacturing PMI for April was 51.6, exceeding expectations of 50.2 and the previous reading of 50.8. The final S&P Global US Services PMI for April was 50.8, down from the preliminary reading of 51.4. The US ISM Services PMI returned to expansion territory in April, significantly higher than the expected 50.2, with the index measuring prices paid by businesses for materials and services surging to its highest level in over two years, indicating that tariff-induced inflationary pressures are increasing. Surveys show that US service sector firms are concerned about the impact of Trump's tariffs on prices and the sharp reduction in federal spending due to the government's pursuit of significant spending cuts.

The US Fed is set to conclude its two-day meeting on Wednesday, with markets widely expecting the Fed to keep interest rates unchanged, following a robust March employment report released last Friday. Currently, markets imply only a 37% probability of a Fed rate cut in June, down from 64% a month ago. Both Goldman Sachs and Barclays have pushed back their rate cut expectations from June to July. (Wenhua Comprehensive)

Data Aspects:

[Global manufacturing PMI continued to decline in April, increasing downward pressure on the economy] The China Federation of Logistics and Purchasing (CFLP) released today (May 6) the global manufacturing purchasing managers' index (PMI) for April. The index has been operating in contraction territory below 50% for two consecutive months, indicating increased downward pressure on the global economy. The global manufacturing PMI for April was 49.1%, down 0.5 percentage points MoM, marking the second consecutive month of decline. Analysts believe that the continued weakness in global manufacturing reflects the pressure on the global economy. Disturbed by the US tariff hikes, the downward risks to the global economy are gradually increasing.

Data to be released today include the final SPGI Services PMI for the UK in April, the leading indicator for the turning point in the global industrial production cycle in April (irregular), Canada's trade balance for March, Canada's IVEY seasonally adjusted PMI for April, the final Services PMI for the Eurozone in April, the Eurozone's PPI MoM for March, the US trade balance for March, and the US Global Supply Chain Pressure Index for April. Also of note: The European Central Bank will hold its Central Bank Forum until May 7. On May 6, the Dalian Commodity Exchange will have a call auction for all contracts from 08:55-09:00 AM; night session trading will resume that evening. The Seoul Stock Exchange will be closed on May 6 for Children's Day.

Crude Oil Aspects:

As of 15:06, oil prices in both markets rose over 1%, with US crude up 1.89% and Brent crude up 1.88%. This followed a technical rebound and bargain-hunting after the previous day's price decline triggered by OPEC+'s decision to accelerate production increases, though concerns about market supply surpluses remain.

IG market strategist Yeap Jun Rong stated, "Today's slight rebound in oil prices appears to be more due to technical factors rather than fundamentals. Factors such as the reversal of OPEC's production policy, demand uncertainty amid US tariff risks, and downward revisions to price forecasts continue to weigh on overall price trends."

Data showed that the growth in the US services sector, a major global oil consumer, in April also provided support to the market. The US Institute for Supply Management (ISM) report for April indicated that the US services sector, which accounts for two-thirds of the US economy, grew faster than expected. The ISM said on Monday that its Non-Manufacturing PMI rose to 51.6 in April from 50.8 in March. Economists surveyed had expected it to fall to 50.2. (Wenhua Comprehensive)

SMM Daily Commentary

► Aluminum prices fell sharply, while aluminum scrap prices showed resilience and declined moderately [Daily Commentary on Aluminum Scrap]

► Aluminum prices fluctuated and fell after the holiday, with secondary aluminum prices generally declining [Daily Commentary on ADC12 Prices]

► The market remained cautious after the holiday, with spot prices of electrolytic manganese remaining stable [SMM Daily Commentary on Electrolytic Manganese]

► [SMM Daily Commentary] Tug-of-war between sellers and buyers in the manganese ore market, with spot prices remaining stable

► Rare earth prices stabilized after the Labour Day holiday [SMM Daily Commentary on Rare Earths]

► Silver prices rose slightly after the Labour Day holiday, with the basis expanding; suppliers held onto their inventory, resulting in light trading [SMM Daily Commentary]