Most metals declined, while lithium carbonate, polysilicon, SHFE gold and silver rose by over 1%. Alumina rose for four consecutive days! [SMM Daily Review]

》[Live] Research and Analysis on Macroeconomy, Electric Power, Infrastructure, Real Estate, and PV Markets; Outlook on Copper and Aluminum Prices; Insights into Cable Technology Trends

SMM News on May 22:

Metal Market:

As of the daytime close, overseas base metals generally declined, with only SHFE aluminum and SHFE nickel rising together. SHFE aluminum rose by 0.2%, and SHFE nickel rose by 0.03%. SHFE lead led the losses with a decline of 1.21%, while SHFE tin fell by 0.87%. The main alumina contract rose by 1.01%, recording four consecutive gains.

In addition, the main lithium carbonate contract rose by 1.67%, the main polysilicon contract rose by 1.14%, the main silicon metal contract fell by 0.19%, and the main European container shipping contract fell by 0.95%.

The ferrous metals series showed mixed performance. Iron ore led the gains with a rise of 0.14%, stainless steel rose by 0.04%, and HRC rose by 0.09%. In the coking coal and coke sector, coking coal fell by 0.85%, and coke fell by 1.66%.

In the overseas market, as of 15:02, only LME aluminum rose, up by 0.4%. The rest of the metals recorded varying degrees of decline, with LME lead falling by 0.91% and LME tin falling by 0.62%. The declines in other metals fluctuated slightly.

In the precious metals sector, as of 15:02, COMEX gold rose by 0.49%, and COMEX silver rose by 0.12%. Domestically, SHFE gold rose by 1.22%, recording five consecutive gains, and SHFE silver rose by 1.06%.

Market conditions as of 15:02 today

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Macro Front

Domestic:

[State Administration for Market Regulation Seeks Public Comments on Renewal of Old Residential Elevators] According to today's official website news from the State Administration for Market Regulation, in order to thoroughly implement the relevant decisions and deployments of the CPC Central Committee and the State Council, systematically promote the use of ultra-long-term special treasury bond funds to support the renewal of old residential elevators, and ensure the safety of residents using elevators, the "Notice on Further Improving the Renewal of Old Residential Elevators (Draft for Comments)" has been drafted and is now open for public comments. It mentions that local market regulatory authorities should urge elevator manufacturing units to earnestly fulfill their production responsibilities and provide elevator products with high quality, reasonable prices, and excellent after-sales service for the renewal of old residential elevators. The safety performance indicators of the drive units, control systems, door systems, suspension devices, and deflector sheaves selected by the manufacturing units for the renewed elevators must not be lower than those of the original elevators in use, ensuring sufficient safety margins.

[Total Installed Power Generation Capacity Nearly 3.5 Billion kW in the First Four Months of This Year] Statistics released by the National Energy Administration show that as of the end of April, the total installed power generation capacity nationwide was 3.49 billion kW, up 15.9% YoY. Among them, the installed power generation capacity for solar energy was 990 million kW, up 47.7% YoY; the installed capacity for wind power was 540 million kW, up 18.2% YoY. From January to April this year, the total investment in power supply projects by major power generation enterprises nationwide reached 193.3 billion yuan, up 1.6% YoY; the total investment in power grid projects reached 140.8 billion yuan, up 14.6% YoY.

[Shanghai Municipal Financial Regulatory Bureau: Supporting SHFE, CFFEX, and other financial markets in Shanghai to build world-class exchanges] Zhou Xiaoquan, Executive Deputy Director of the Shanghai Municipal Financial Regulatory Bureau, stated at the "2025 Shanghai Derivatives Market Forum" that Shanghai is further strengthening the functions of its financial markets, supporting SHFE, CFFEX, and other financial markets in Shanghai to build world-class exchanges, accelerating the construction of a center for RMB financial asset allocation and risk management, and better serving national strategies and safeguarding national security. First, it will continue to deepen the opening up of financial markets and enhance their internationalization. It will deepen the interconnection and interoperability of financial markets and accelerate the launch of international-oriented financial products. Second, it will continue to improve the layout of the derivatives system and expand the breadth and depth of services to the real economy. It will support the further enrichment of commodity and financial futures products, empowering the development of new quality productive forces with a more comprehensive product system. Third, it will enhance the ability to prevent and resolve financial risks and safeguard national strategic security. It will leverage the functions of the futures market to help real enterprises better manage risks and safeguard the security of China's industry and supply chains. It will support financial markets in seizing opportunities in digitalization, intelligence, and green development, enhancing their capabilities for independent and controllable system operations and secure maintenance. (Caijing)

[SHFE: Accelerating the R&D and listing of varieties such as cast aluminum alloy and LNG] Tian Xiangyang, Chairman of SHFE, stated at the 2025 Shanghai Derivatives Market Forum that SHFE will establish a first-class product system that meets the needs of new quality productive forces, accelerating the R&D and listing of varieties such as cast aluminum alloy, LNG, offset printing paper, and corrugated base paper. It will create a first-class institutional mechanism that combines international standards with Chinese characteristics, steadily promoting portfolio margining, launching new trading instructions, and deepening the market's functions.

The People's Bank of China conducted 154.5 billion yuan of 7-day reverse repo operations today, with an operating interest rate of 1.40%, unchanged from the previous rate. As 64.5 billion yuan of 7-day reverse repos matured today, a net injection of 90 billion yuan was achieved.

►The central parity rate of the RMB against the US dollar in the interbank foreign exchange market on May 22 was 7.1903 yuan per US dollar.

US dollar:

As of 15:02, the US dollar index fell by 0.01% to 99.6. Increased market concerns over the growing US debt, coupled with weak demand for 20-year US Treasury bonds, highlighted the market's low appetite for US assets. US House Speaker Johnson stated that a vote on a massive tax cut and spending bill could take place as early as Wednesday evening. The US Treasury Department sold $16 billion worth of 20-year bonds on Wednesday, but demand was weak. Investors are concerned that as Congress continues to debate the tax cut bill, the US debt burden will continue to grow. Later this week, several US Fed officials will deliver speeches that may provide further clues about the economy and the central bank's policy path. The market is currently pricing in at least a 50 basis point interest rate cut this year, with the first cut expected in October.

Macro Aspects:

Today, the preliminary SPGI Manufacturing PMI for France in May, the preliminary SPGI Manufacturing PMI for Germany in May, the preliminary SPGI Manufacturing PMI for the Eurozone in May, the Germany May IFO Business Climate Index, the preliminary SPGI Services PMI for the UK in May, the preliminary SPGI Manufacturing PMI for the UK in May, the CBI Industrial Trends Orders in the UK in May, the CFIB Business Barometer in Canada in May, the initial jobless claims in the US for the week ending May 17, the continued jobless claims in the US for the week ending May 10, the preliminary SPGI Manufacturing PMI for the US in May, and the annualized total of existing home sales in the US in April, among other data, will be released. Additionally, it is worth noting that Thomas Barkin, the 2027 FOMC voter and president of the Federal Reserve Bank of Richmond, will attend an event titled "Fed Listens." The State Council Information Office will hold a press conference, where Qiu Yong, Vice Minister of the Ministry of Science and Technology, Zhu Hexin, Deputy Governor of the People's Bank of China and Director of the State Administration of Foreign Exchange, and relevant officials from the National Administration of Financial Regulation and the China Securities Regulatory Commission will introduce the situation regarding science and technology finance policies and answer questions from reporters. The European Central Bank will release the minutes of its April monetary policy meeting.

Crude Oil Aspects:

As of 15:02, oil prices in both markets fell simultaneously, with US oil down 1.61% and Brent oil down 1.63%. Kazakhstan continues to overproduce, and OPEC+ may adopt a more aggressive production increase strategy to enforce discipline. Kazakhstan has repeatedly exceeded its OPEC+ production quota, with its oil output further increasing by 2% in May to reach 1.86 million barrels per day, far exceeding its quota of 1.486 million barrels per day. This country, which has significantly overproduced, is becoming a headache for cooperation within OPEC+, undermining the credibility of OPEC+'s compensatory production cut agreement. OPEC+ may still consider a more aggressive production increase strategy on June 1 to warn member countries within the organization to strengthen production cut discipline, thereby putting greater supply pressure on the oil market.

As Saudi Arabia shifts towards increasing production and demand slows down, the risk of inventory buildup in the oil market is gradually intensifying. According to the IEA's latest monthly report, it is expected that the increase in global crude oil supply in 2025 will far exceed the increase in demand, which is also the mainstream view of the vast majority of research institutions. The International Energy Agency (IEA) significantly raised its forecast for global supply growth in 2025 by 380,000 barrels per day (bpd) to 1.6 million bpd, primarily due to Saudi Arabia's shift from adhering to production cuts to accelerating production increases. The IEA also sharply lowered its forecast for global crude oil demand growth in 2025 from 1.03 million bpd to 730,000 bpd, and further reduced its projection for global crude oil demand growth in 2026 to 690,000 bpd, citing a global economic slowdown leading to a slowdown in oil product consumption. Meanwhile, OPEC lowered its forecast for global crude oil demand growth in 2025 from 1.45 million bpd to 1.3 million bpd. While the organization remains more optimistic from a seller's perspective, it has to admit that the demand outlook is deteriorating. (Wenhua Comprehensive)

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