Most metals fell, with LME tin and coking coal down over 3%, LME nickel and coke down over 2%, and SHFE tin and SHFE nickel down over 1% [overnight market]

SMM, May 29:

Metal Market:

Overnight, metals in both domestic and overseas markets generally declined, with only LME lead and SHFE lead rising together. LME lead increased by 0.18%, while SHFE lead rose by 0.21%. In the overseas market, LME tin and LME nickel both fell by over 2%, with LME nickel dropping by 2.04% and LME tin by 3.35%. SHFE tin and SHFE nickel also declined by over 1%, with SHFE tin falling by 1.84% and SHFE nickel by 1.14%. The declines for other metals were all within 1%. The main alumina contract fell by 1.9%.

In the ferrous metals series, except for iron ore, all metals declined. Iron ore rose by 0.21%, stainless steel fell by 0.63%, and HRC declined by 0.68%. In the coking coal and coke sector, coking coal dropped by 3.23%, and coke fell by 2.1%.

In the precious metals sector, as of the overnight close, COMEX gold fell by 0.48%, and COMEX silver declined by 0.65%. Domestically, SHFE gold rose by 0.07%, and SHFE silver fell by 0.26%.

Overnight closing prices as of 8:16 a.m. on May 29

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Macro Front

Domestic:

From May 27 to 28, Zhang Guoqing, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, conducted a survey in Shanghai on promoting the healthy development of the platform economy and market regulation. He emphasized the need to thoroughly implement the important instructions and directives of General Secretary Xi Jinping, implement the decisions and deployments of the CPC Central Committee and the State Council, focus on promoting high-quality development, comprehensively strengthen governance capabilities in the field of market regulation, promote the construction of a sound ecosystem for the platform economy, and maintain a fair and orderly market environment.

A Caixin reporter learned from multiple informed sources that at a recent symposium between Chinese and European semiconductor upstream and downstream enterprises organized by the Ministry of Commerce, the ministry explained the rare earth export control policy and strengthened communication with Chinese and European chip enterprises on rare earth export controls to maintain the stability of the global industry chain. Another informed source indicated that this move suggests that China may relax rare earth export controls targeting the industry chains of Chinese and European semiconductor enterprises.

The website of the Shenzhen Municipal Housing and Construction Bureau released the "Administrative Measures for the Allocation and Sale of Affordable Housing in Shenzhen (Draft for Comment)" and the "Administrative Measures for the Planning and Construction of Affordable Housing in Shenzhen (Revised Draft for Comment)". The drafts mention that allocated affordable housing will be subject to strict closed management, prohibiting any form of conversion into commercial housing.

US Dollar:

Overnight, the US dollar index rose by 0.28% to 99.89, recording two consecutive days of gains. This was driven by market optimism that the trade agreement would improve the US economic outlook. The US dollar reacted mediocrely to the release of the US Fed's May 6-7 meeting minutes on Wednesday. US Fed officials have acknowledged that they may face a "difficult trade-off" between rising inflation and unemployment in the coming months, a view supported by the Fed staff's forecast of an increased risk of economic recession. The US Fed kept interest rates unchanged at its May meeting. Federal funds rate futures traders believe that the Fed is most likely to resume interest rate cuts in September. Consumer confidence data released on Tuesday far exceeded expectations, reinforcing the perception that the US economy remains robust. Until clear signs of weakness emerge, the Fed is expected to prioritize inflation in its monetary policy decisions.

Other currencies:

The euro fell 0.35% to $1.1288. The US dollar rose 0.33% against the Japanese yen to 144.8 yen.

Demand for 40-year Japanese government bonds (JGBs) auctioned on Wednesday fell to its lowest level since July, amid a sell-off in ultra-long-term JGBs this month.

The Australian dollar fell 0.33% to $0.6422. Earlier data showed that consumer inflation in Australia remained stable in April, with little change in hopes for further interest rate cuts.

The New Zealand dollar rose 0.2% to $0.5958. The country's central bank cut interest rates by 25 basis points as expected, suggesting that its easing policy may be closer to ending than some market participants had anticipated.

Data:

Today, the US initial jobless claims for the week ending May 24, the first revision to the annualized quarterly rate of real GDP for Q1, the first revision to the quarterly rate of the GDP price index for Q1, the first revision to the annualized quarterly rate of the core PCE price index for Q1, the first revision to the annualized quarterly rate of consumer spending for Q1, the first revision to the quarterly rate of the implicit GDP deflator for Q1 (seasonally adjusted), and the monthly rate of the US pending home sales index for April (seasonally adjusted) will be released.

In addition, the US Fed will release the minutes of its May monetary policy meeting at 2:00 Beijing time. Bank of England Governor Bailey will deliver a speech at the annual dinner of the Irish Association of Investment Managers.

Crude oil:

As of the overnight close, oil prices in both markets rose together, with US crude oil up 1.59% and Brent crude oil up 1.2%. The gains were mainly driven by supply concerns, as OPEC+ member countries agreed to maintain their production policies unchanged.

At its Wednesday meeting, OPEC+ made no adjustments to its production policies but agreed to establish a mechanism to set benchmarks for its oil production in 2027. However, OPEC+ sources said that the monthly meeting of eight member countries to be held on Saturday may agree to further accelerate production increases in July. OPEC+ is composed of the Organization of the Petroleum Exporting Countries (OPEC) and oil-producing allies led by Russia. The organization has been discussing a new production benchmark in recent years, which refers to the production level that each member country uses as a reference for increasing or cutting production.

Data released by the American Petroleum Institute (API) on Wednesday showed that US crude oil inventories fell by 4.24 million barrels, gasoline inventories decreased by 528,000 barrels, and distillate inventories rose by 1.3 million barrels in the week ending May 23. The US Energy Information Administration (EIA) is set to release US oil inventory data on Thursday. Analysts forecast that US crude oil inventories increased by approximately 100,000 barrels, distillate inventories rose by around 500,000 barrels, and gasoline inventories fell by about 500,000 barrels last week. (Wenhua Comprehensive)