Crude oil drops over 2%, US dollar weakens, metals show mixed performance, alumina rises over 3%, gold and silver decline together [SMM Daily Review]

SMM News on May 15:

Metal Market:

As of the daytime close, domestic market base metals generally rose, with only SHFE copper and SHFE nickel declining together. SHFE copper fell by 0.8%, and SHFE nickel fell by 0.64%. SHFE aluminum, SHFE lead, and SHFE zinc all rose by over 0.3%, with SHFE aluminum up 0.32%, SHFE lead up 0.33%, and SHFE zinc up 0.31%. The main alumina contract rose by 3.82%.

In addition, the main lithium carbonate contract fell by 0.96%, the main polysilicon contract fell by 0.68%, and the main silicon metal contract rose by 0.36%. The main European container shipping contract surged by 8.72%.

In the ferrous metals series, most prices rose, with only stainless steel falling by 0.23%. Iron ore led the gains with a 1.17% increase, while other metals fluctuated slightly. In the coking coal and coke segment, coking coal rose by 0.34%, and coke rose by 0.44%.

In the overseas market, as of 15:04, only LME tin rose by 0.38%. LME nickel led the losses with a 1.49% decline, followed by LME lead down 0.9%, LME copper down 0.88%, and LME aluminum down 0.65%.

In precious metals, as of 15:04, COMEX gold fell by 1.05%, hitting a new low since April 10 during the session. COMEX silver fell by 1.11%. Domestically, SHFE gold fell by 3.2%, hitting a new low since April 10 during the session at 732.64 yuan/gram. SHFE silver fell by 2.34%.

Market conditions as of 15:04 today

》Click to view SMM Market Dashboard

Macro Front

Domestic Aspects:

[First RRR cut of the year implemented! Approximately 1 trillion yuan of long-term liquidity released] The People's Bank of China (PBOC) recently announced that starting from May 15, it would lower the reserve requirement ratio (RRR) for financial institutions by 0.5 percentage points (excluding those already implementing a 5% RRR), and lower the RRR for auto finance companies and financial leasing companies by 5 percentage points. A 0.5 percentage point RRR cut is expected to provide approximately 1 trillion yuan of long-term liquidity to the market. Lowering the RRR for auto finance companies and financial leasing companies from the original 5% to 0% will enhance the credit supply capabilities of these two types of institutions in specific areas. 》Click for details

► The central parity rate of the RMB against the US dollar in the interbank foreign exchange market on May 15 was 7.1963 yuan per US dollar.

US Dollar Aspects:

As of 15:04, the US dollar index fell by 0.39%. US Fed Vice Chair Jefferson stated that recent inflation data showed that US inflation continues to move towards the Fed's 2% target, but the outlook is currently uncertain due to the potential for new tariffs to push up prices. Mary Daly, President of the Federal Reserve Bank of San Francisco, stated that the US economy and labour market are robust, with inflation declining. Given that the current monetary policy is appropriately calibrated and not overly restrictive, the US Fed can continue to adopt a wait-and-see approach amid persistent uncertainties, adjusting interest rates as needed. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, believes that the mild consumer inflation data for April may not fully reflect the impact of rising US import tariffs, and the Fed still requires more data to understand the trajectory of prices and the economy.

Currently, market focus is on the US producer price index data to be released later today. Following the consumer price data coming in below expectations, the market is seeking further clues about the Fed's policy path. The market expects the Fed to cut interest rates by 50 basis points this year, starting in October.

Macro Aspects:

Today, the following data will be released: US initial jobless claims for the week ending May 10, US May New York Fed manufacturing index, US May New York Fed manufacturing index for the next six months, US May Philadelphia Fed manufacturing index, US April PPI year-over-year rate, US April core PPI year-over-year rate, US April core retail sales month-over-month rate, US April retail sales year-over-year rate, US April retail sales control group month-over-month rate associated with GDP - seasonally adjusted, US April industrial production month-over-month rate, US April capacity utilisation rate, US April manufacturing production month-over-month rate, US April industrial production year-over-year rate - seasonally adjusted, Australia April RBA foreign exchange transactions - market channel, Australia April seasonally adjusted unemployment rate, Australia April change in employed population, UK March GDP month-over-month rate, UK March industrial production month-over-month rate, UK March industrial production year-over-year rate, UK March goods trade balance - seasonally adjusted, UK March seasonally adjusted trade balance, UK Q1 production-based GDP year-over-year preliminary estimate, Canada March manufacturing sales month-over-month rate, Canada March manufacturing new orders month-over-month rate, Eurozone Q1 seasonally adjusted GDP quarter-over-quarter rate revised value, Eurozone Q1 seasonally adjusted GDP year-over-year rate revised value, among others.

In addition, Fed Chairman Jerome Powell delivered opening remarks at an event, and the Fed held the second Thomas Laubach Research Conference, which will focus on research in monetary policy and economics and is expected to provide an academic perspective for the Fed's monetary policy framework review, which it undertakes every five years, until the 16th. Mary Daly, 2027 FOMC voter and President of the Federal Reserve Bank of San Francisco, participated in a fireside chat.

Crude Oil Aspects:

As of 15:04, oil prices in both markets fell by over 2% simultaneously, with US crude oil dropping by 2.74% and Brent crude oil by 2.59%. This is due to market expectations of a potential nuclear deal between the US and Iran, coupled with an unexpected increase in US crude oil inventories last week, exacerbating investors' concerns about a supply surplus.

"The new round of selling is due to expectations of easing tensions between the US and Iran, which could potentially relax the global crude oil supply-demand balance," said Yuki Takashima, an economist at Nomura Securities. IG analyst Tony Sycamore noted that the unexpected increase in US inventories overnight also weighed on oil prices, as did profit-taking after crude oil rebounded to the top of its recent range of $55-65 per barrel. "My forecast is that we will continue to see a sideways-moving market over the next month or so, but unless there is an unexpected shock in tensions, oil prices will trend towards $50 per barrel," he said.

The US Energy Information Administration (EIA) reported on Wednesday that US crude oil inventories rose by 3.5 million barrels to 441.8 million barrels in the week ending May 9, contrary to analysts' expectations of a 1.1 million barrel drawdown, according to a survey. Data released by the American Petroleum Institute (API) showed that US crude oil inventories increased by 4.3 million barrels in the same week. The Organization of the Petroleum Exporting Countries (OPEC) stated in its monthly report that the total crude oil production of all OPEC+ member countries fell by 106,000 barrels per day in April from March, despite eight OPEC+ oil-producing countries vowing to start easing production cuts. (Wenhua Comprehensive)

SMM Daily Review

►Aluminum Prices Rise for Four Consecutive Days, While Secondary Aluminum Prices Struggle to Increase [[Daily Review of ADC12 Prices]

►[SMM Daily Review of Nickel Sulphate] May 15: Demand for Nickel Salts Weakens

►[SMM Daily Review of MHP] May 15: Indonesian MHP Prices Increase Slightly

►Buyer Sentiment Remains in High-Grade NPI Market, Short-Term Transaction Prices Under Pressure [[Daily Review of NPI]

►[SMM Daily Review of Indonesian Nickel Ores] Indonesian Pyrometallurgical and Hydrometallurgical Laterite Nickel Ore Prices Continue to Diverge