US dollar falls, most metals prices fall, with LME aluminum and LME lead leading the decline, while alumina and NYMEX gold rise over 1% [Overnight Market]

SMM May 20 News:

Metal Market:

Overnight, most domestic base metals declined, with SHFE tin rising by 0.15%, SHFE copper by 0.54%, SHFE nickel falling by 0.31%, SHFE lead by 0.71%, SHFE aluminum by 0.62%, and SHFE zinc by 0.27%. In addition, the most-traded alumina futures rose by 1.23%.

Overnight, the ferrous metals series all fell, with iron ore declining by 0.14%, stainless steel by 1.16%, rebar by 0.62%, and HRC by 0.37%. In terms of coking coal and coke: coking coal fell by 0.53%, and coke by 0.49%.

Overnight, LME base metals generally declined, with LME copper rising by 0.73%, LME aluminum by 1.83%, LME lead by 1.78%, LME zinc by 0.71%, LME tin by 0.44%, and LME nickel by 0.95%.

Overnight, precious metals: COMEX gold rose by 1.41%, and COMEX silver by 0.44%. Overnight, SHFE gold rose by 0.97%, and SHFE silver by 0.25%. Data released by the World Gold Council (WGC) showed that, for the week ending May 16, global physical gold ETFs saw outflows of $2.965 billion, with open interest at 3,525.6 mt, a decrease of 30 mt or 0.8%. Renowned investment bank Goldman Sachs remains optimistic that gold prices will reach $3,700 per ounce by the end of the year. Goldman Sachs data indicates that global central banks had strong demand for gold in March this year. Since the beginning of the year, global central banks' average monthly demand for gold has been 94 mt, far exceeding the previously estimated 80 mt.

As of 8:13 on May 20, overnight closing prices

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Macro Front

Domestic:

[MIIT: Maintain Steady Growth in Manufacturing, Stabilize and Expand Employment Capacity] Li Lecheng, Secretary of the Party Leadership Group, Minister, and Leader of the Employment Promotion Working Group of the Ministry of Industry and Information Technology (MIIT), presided over a meeting of the Employment Promotion Working Group. The meeting emphasized the need to strengthen coordination, ensure the meticulous implementation of various tasks, form a joint effort, and strive for tangible results. Maintain steady growth in manufacturing, stabilize and expand employment capacity. Implement a new round of work plans for stabilizing growth in key industries, and implement the policies of "implementation of major national strategies and the development of security capabilities in key areas" and "program of large-scale equipment upgrades and consumer goods trade-ins". Strengthen technological transformation of enterprises in key industries, and do a good job in job creation and vocational ability enhancement and transformation during digital transformation. Implement actions to cultivate emerging industries and create new momentum, fostering new growth points such as artificial intelligence and low-altitude industries. Cultivate and expand high-quality enterprises to enhance their employment absorption capacity.

[SAFE: Foreign Investors' Willingness to Allocate RMB Assets Continues to Improve, Foreign Investment in Domestic Stocks Turned Net Buying in Late April] Li Bin, Deputy Director of the State Administration of Foreign Exchange (SAFE) and spokesperson, stated that in April, cross-border capital inflows from non-bank sectors, including enterprises and individuals, amounted to $17.3 billion. From the perspective of major channels, firstly, China's foreign trade has demonstrated certain resilience, with a net inflow of cross-border funds under goods trade amounting to $64.9 billion, maintaining a relatively high level. Secondly, foreign investors' willingness to allocate RMB assets has continued to improve. In April, foreign investors net increased their holdings of domestic bonds by $10.9 billion, reaching a relatively high level. In late April, foreign investment in domestic stocks turned to net purchases. Thirdly, the main outflow channels have remained stable and orderly. In April, the net outflow of funds from service trade was basically flat MoM. The seasonal repatriation of profits by foreign-invested enterprises increased but remained lower than the same period last year. Inbound and outbound foreign direct investment was basically stable, and cross-border funds from borrowing and lending among affiliated enterprises shifted from net outflow to basically balanced.

[China Construction Bank and China Merchants Bank Cut Deposit Rates, with 1-Year Fixed Deposit Rate Falling Below 1%] China Construction Bank lowered its RMB deposit rates on May 20th. The demand deposit rate was reduced by 5 basis points to 0.05%. The rates for three-month, six-month, one-year, and two-year fixed deposits with lump-sum deposit and withdrawal were all lowered by 15 basis points to 0.65%, 0.85%, 0.95%, and 1.05%, respectively. The rates for three-year and five-year fixed deposits were lowered by 25 basis points to 1.25% and 1.3%, respectively. The rates for three types of fixed deposits with staggered deposit and withdrawal (lump-sum deposit and staggered withdrawal, staggered deposit and lump-sum withdrawal, and lump-sum deposit with interest withdrawal) were all lowered by 15 basis points. The 7-day call deposit rate was lowered by 15 basis points to 0.3%. China Merchants Bank also lowered its RMB deposit rates. The demand deposit rate was reduced by 5 basis points to 0.05%. The rates for three-month, six-month, one-year, and two-year fixed deposits with lump-sum deposit and withdrawal were all lowered by 15 basis points to 0.65%, 0.85%, 0.95%, and 1.05%, respectively. The rates for three-year and five-year fixed deposits were lowered by 25 basis points to 1.25% and 1.3%, respectively. The rates for three types of fixed deposits with staggered deposit and withdrawal were all lowered by 15 basis points. The 7-day call deposit rate was lowered by 15 basis points to 0.3%.

US Dollar:

The overnight US dollar index fell by 0.59% to close at 100.36. Moody's downgraded the US sovereign credit rating from "Aaa" to "Aa1", citing the US government's outstanding debt of $36 trillion and the heavy interest burden. Pressured by the downgrade of the US government's credit rating late last Friday, the US dollar generally fell on Monday, with its exchange rates against safe-haven currencies such as the Japanese yen, Swiss franc, and euro hitting new lows in more than a week. Trade tensions also weighed on the US dollar.

Other Currencies:

The European Commission stated that due to the US trade war and uncertainties, economic growth in the eurozone will slow down this year and next. The eurozone's GDP growth rate is expected to be only 0.9% this year, lower than the 1.3% projected in November last year. The projected growth rate for 2026 is 1.4%, still below the previously expected 1.6%. The downgraded growth outlook is mainly due to weak global trade and rising uncertainties in trade policies. The report assumes that the US will maintain tariffs on EU goods, including a 25% tariff on steel, aluminum, and automobiles. The economic outlook faces downside risks, as further fragmentation in global trade could curb GDP growth and trigger inflationary pressures. If trade tensions between the EU and the US ease or if trade expansion between Europe and other countries accelerates, economic growth may rebound. The eurozone's unemployment rate is expected to continue declining this year and next, reaching 6.1% by 2026. Consumer inflation is projected to fall from 2.4% last year to 2.1% and 1.7% this year and next, respectively. (Huitong Finance)

In April, the eurozone's CPI rose 2.2% YoY, in line with expectations; it rose 0.6% MoM, also in line with expectations. France (0.9%), Cyprus (1.4%), and Denmark (1.5%) had the lowest annual growth rates. Romania (4.9%), Estonia (4.4%), and Hungary (4.2%) had the highest annual growth rates. Compared to March 2025, annual inflation rates fell in 13 member states, remained stable in 3, and rose in 11. In April 2025, services contributed the most to the eurozone's annual inflation rate (+1.80 percentage points, pp), followed by food, alcohol, and tobacco (+0.57pp), non-energy industrial goods (+0.15pp), and energy (-0.35pp). (Caijing)

Macro:

Today, data including China's one-year Loan Prime Rate (LPR) for May, China's five-year LPR for May, China's annual rate of total electricity consumption for April, Australia's cash rate for May, Canada's unadjusted annual CPI rate for April, Canada's central bank's core monthly CPI rate for April, and the preliminary eurozone consumer confidence index for May will be released. Additionally, notable events include the Reserve Bank of Australia (RBA) announcing its interest rate decision, RBA Governor Michele Bullock holding a monetary policy press conference, and the G7 finance ministers and central bank governors meeting, which will run through May 22.

Crude Oil:

Both oil futures rose slightly, with US crude up 0.29% and Brent crude up 0.11%. This was due to market concerns about supply prospects offsetting the impact of Moody's downgrade of the US sovereign credit rating.

A preliminary survey on Monday indicated that US crude oil and refined product inventories likely fell last week. Before the weekly inventory data was released, the average forecast of five surveyed institutions was that US crude oil inventories were expected to fall by about 1.4 million barrels in the week ending May 16. The weekly inventory report from the American Petroleum Institute (API) will be released at 4:30 on Wednesday, and the US Energy Information Administration (EIA) will publish its weekly crude oil inventory report at 22:30 on Wednesday. (Webstock Inc.)