Crude oil rises over 1%, metals show mixed performance, SHFE aluminum falls over 2%, polysilicon and lithium carbonate lead the declines [SMM Daily Review]

SMM, May 7:

Metal Market:

As of the daytime close, domestic metals showed mixed performance. SHFE tin led the gains with a 0.35% increase, followed by SHFE copper (up 0.15%) and SHFE lead (up 0.06%). SHFE aluminum led the declines with a 2.04% drop, followed by SHFE zinc (down 0.94%). The main alumina contract rose by 0.45%.

In addition, the main lithium carbonate contract fell by 1.99%, the main polysilicon contract dropped by 3.14%, and silicon metal declined by 0.96%. The main European container shipping contract fell by 1.83%.

In the ferrous metals series, iron ore and HRC rose by over 0.3%, with iron ore up 0.35% and HRC up 0.34%. In the coking coal and coke sector, coking coal fell by 0.77% and coke declined by 0.66%.

In the overseas market, as of 15:03, base metals generally declined. LME aluminum led the declines with a 1.19% drop, followed by LME tin (down 0.57%) and LME copper (down 0.56%). LME lead rose by 0.23%. The % changes of other metals fluctuated slightly.

In precious metals, as of 15:03, COMEX gold fell by 0.67% and COMEX silver declined by 0.27%. Domestically, SHFE gold rose by 0.88% and SHFE silver increased by 0.17%.

Market conditions as of 15:03 today

》Click to view SMM market dashboard

Macro Front

Domestic:

[Pan Gongsheng, Li Yunze, and Wu Qing made significant statements on RRR cuts, interest rate cuts, the stock market, and the real estate market...] At 9 a.m. on May 7, the State Council Information Office will hold a press conference, where the heads of the People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission will introduce the "package of financial policies to stabilize the market and expectations." Governor of the People's Bank of China Pan Gongsheng, Director of the National Financial Regulatory Administration Li Yunze, and Chairman of the China Securities Regulatory Commission Wu Qing will attend the conference. Pan Gongsheng stated that the reserve requirement ratio (RRR) will be cut by 0.5 percentage points, which is expected to provide approximately 1 trillion yuan in long-term liquidity to the market. The policy interest rate will be lowered by 0.1 percentage points, meaning the 7-day reverse repo operation rate in the open market will be reduced from the current 1.5% to 1.4%. This is expected to drive the loan prime rate (LPR) to decline synchronously by about 0.1 percentage points. The interest rates of structural monetary policy tools will be lowered by 0.25 percentage points, including the interest rates of various special structural tools and re-lending rates for supporting agriculture and small businesses, which will be reduced from the current 1.75% to 1.5%. The pledged supplementary lending (PSL) rate will be reduced from the current 2.25% to 2%. Li Yunze stated that eight incremental policies have been recently introduced, including accelerating the introduction of a series of financing systems tailored to the new model of real estate development, further expanding the scope of pilot programs for long-term investment by insurance funds to introduce more incremental funds into the market, adjusting and optimizing regulatory rules, reducing the risk factors for insurance companies' stock investments to support a stable and active capital market, promptly introducing a package of policies to support the financing of small and micro enterprises and private enterprises, formulating a series of policy measures for the banking and insurance industries to support the development of foreign trade, providing precise services to market entities significantly affected by tariffs, revising the management measures for merger and acquisition loans to increase investment in science and technology innovation enterprises, and formulating opinions on the high-quality development of technology insurance.Wu Qing, Chairman of the China Securities Regulatory Commission, stated at a press conference held by the State Council Information Office that efforts would be made to consolidate the momentum of market stability and improvement, dynamically improve work plans to address various external risk attacks, and fully support the role of Central Huijin Investment Ltd. as a quasi-stabilization fund. 》Click to view details

【PBOC: Reduce personal housing provident fund loan interest rates by 0.25 percentage points from May 8】The People's Bank of China (PBOC) issued a notice regarding the reduction of personal housing provident fund loan interest rates. The PBOC has decided to reduce personal housing provident fund loan interest rates by 0.25 percentage points from May 8, 2025. The interest rates for first-home personal housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years will be adjusted to 2.1% and 2.6%, respectively. The interest rates for second-home personal housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years will be adjusted to no less than 2.525% and 3.075%, respectively.

►On May 7, the central parity rate of the RMB exchange rate in the inter-bank foreign exchange market was 7.2005 RMB per US dollar.

US dollar:

As of 15:03, the US dollar index rose by 0.1%. The market is focused on the upcoming policy decision to be announced by the US Fed and is closely watching what policy tone Fed Chairman Powell will convey. The market's attention is centered on the Federal Open Market Committee (FOMC) meeting to be held later in the day, with expectations that the US Fed will maintain interest rates unchanged at this meeting. Since December last year, the US Fed's policy interest rate has remained in the range of 4.25%-4.50%. The market is awaiting a speech by Fed Chairman Powell for clues on the potential timing of future interest rate cuts. The US Department of Commerce reported on Tuesday that the US trade deficit widened by 14% in March to a record $1,40.5 billion, as companies increased imports ahead of Trump-era tariffs.

Data:

Today, data such as New Zealand's Q1 unemployment rate, New Zealand's Q1 labor force participation rate, China's April foreign exchange reserves, Russia's April SPGI Services PMI, France's March trade balance, the eurozone's March retail sales month-on-month rate, the eurozone's March retail sales year-on-year rate, and Canada's April leading indicators month-on-month rate will be released.

Crude oil:

As of 15:03, oil prices in both markets rose by over 1%, with US crude oil up 1.34% and Brent crude oil up 1.17%. On May 3, 2025, the OPEC official website announced that eight countries, including Saudi Arabia and Russia, which had voluntarily cut production, declared a significant increase in crude oil production in June 2025. This marks the third time these eight countries have increased oil production, following March 3 and April 3.At this meeting, Saudi Arabia, the leader of OPEC, issued a warning, urging the organization's member countries with overproduction to take action, or they might face further production increases.

In response, the Kazakh Ministry of Energy issued a statement yesterday, stating that Kazakhstan has always been committed to the OPEC agreement. As the largest oil producer in Central Asia, Kazakhstan is currently "considering all possible options to fulfill its commitments." If it ultimately implements relevant measures, it may lead to adjustments in OPEC's policy of exceeding production increase expectations, which was initially intended to constrain production cut discipline within the organization. Additionally, the US Energy Information Administration (EIA) lowered its forecast for US oil production in 2025 on Tuesday, from the previously estimated 13.51 million barrels per day to 13.41 million barrels per day, which may alleviate the supply surplus pressure in the crude oil market to some extent. (Wenhua Comprehensive)

SMM Daily Review

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