Crude Oil Pulled Back, Base Metals Generally Rose; SHFE Copper, SHFE Zinc, LME Tin, and COMEX Silver Up Over 1%; Lithium Carbonate Down Over 3% [SMM Midday Review]

SMM News, May 13:

Metals market:

As of the midday close, base metals in the domestic market mostly rose. SHFE copper was up 1.63%. SHFE aluminum was up 0.3%. SHFE lead was down 0.15%. SHFE zinc was up 1.46%. SHFE tin was up 0.08%. SHFE nickel edged down.

In addition, the most-traded cast aluminum futures were up 0.15%, the most-traded alumina futures were down 0.71%. The most-traded lithium carbonate futures were down 3.55%. The most-traded silicon metal futures were down 2.74%. The most-traded polysilicon futures were down 0.62%.

Ferrous metals mostly fell. Iron ore was flat at 817.5 yuan/mt. Rebar was down 0.7%. Hot-rolled coil was down 0.57%. Stainless steel was up 0.16%. Coking coal and coke: the most-traded coking coal contract was down 2.51%, and the most-traded coke contract was down 1.28%.

Overseas base metals, as of 11:41, LME metals rose across the board. LME copper was up 0.6%. LME aluminum was up 0.24%. LME zinc was up 0.4%. LME lead was up 0.3%. LME tin was up 1.29%. LME nickel was up 0.87%.

Precious metals, as of 11:41, COMEX gold was up 0.48%, and COMEX silver was up 1.99%. Domestic precious metals: the most-traded SHFE gold futures were down 0.55%, and the most-traded SHFE silver futures were up 1.1%.

In addition, as of the midday close, the most-traded platinum futures edged down, and the most-traded palladium futures were down 1.03%.

As of the midday close, the most-traded Europe containerized freight index contract was up 3.17%, at 2,539.5 points.

As of 11:41 on May 13, midday futures quotes for selected contracts:

Spot and fundamentals

Copper:Looking ahead to tomorrow, copper prices continue to fluctuate at highs, downstream purchasing sentiment remains subdued, and both buying and selling sentiment pulled back intraday, with spot discounts continuing to widen. According to SMM, downstream orders continued to decline from the previous day...

Macro front

[China-US Economic and Trade Consultations Begin in South Korea]At noon local time on May 13, the economic and trade teams of China and the US began China-US economic and trade consultations at Incheon International Airport in Seoul, South Korea. (Xinhua)

Domestic:

[PBOC Reverse Repo Operations Achieve Net Withdrawal of 25.5 Billion Yuan]The PBOC conducted 500 million yuan of 7-day reverse repo operations today. As 26 billion yuan of 7-day reverse repos matured today, a net withdrawal of 25.5 billion yuan was achieved.

US dollar:

As of 11:41, the US dollar index was up 0.01%, at 98.31. The US April CPI rose at a faster-than-expected pace, further intensifying concerns about inflation's impact on the US economy. The Bureau of Labor Statistics reported on Tuesday that the seasonally adjusted headline CPI rose 0.6% MoM and 3.8% YoY. The monthly increase was in line with expectations, but the YoY increase was 0.1 percentage point above market expectations. Core CPI excluding food and energy rose 0.4% MoM and 2.8% YoY, indicating that while inflation remains well above the US Fed's 2% target, pressure mainly comes from non-core areas, especially energy. Energy prices rose 3.8%, once again becoming one of the main drivers of rising inflation; food prices also rose 0.5%. For the full year, energy prices were up 17.9% and food prices were up 3.2%. Gasoline prices were up 28.4% YoY. Although energy, especially gasoline, was the main news focus, inflationary pressures also came from multiple other areas. Housing costs rose 0.6%, tariff-sensitive apparel prices rose 0.6%, airfares rose 2.8% with a YoY increase of 20.7%. Tariffs also appeared to affect other areas, with household furnishings and related spending up 0.7%. (Jin10 Data)

According to CME FedWatch: the probability of the US Fed keeping rates unchanged through June was 97.1%, with a 2.9% probability of a cumulative 25 bps interest rate cut. The probability of the US Fed keeping rates unchanged through July was 96%, with a 3.9% probability of a cumulative 25 bps interest rate cut. (Jin10 Data)

A CITIC Securities research report stated that US April inflation continued to run hot, the spillover effects of Middle East conflicts persisted, and compensatory increases in rent inflation pushed up core readings. High inflation continues to erode the real purchasing power of US households, with low-income households facing stronger cost shocks, and real hourly wages turned negative YoY for the first time in three years. We believe the risk of a second wave of US inflation is relatively small, but high oil prices will constrain the room for inflation to pull back within the year. In the base case, the US Fed is still expected to cut interest rates by 25 bps within the year. US Treasuries are currently more suitable for trading opportunities. After a strong earnings season nears its end, US equities should be watched for short-term risks of profit-taking. The US dollar index may be in the doldrums below 100 but is unlikely to decline persistently.

Other currencies:

According to the latest OECD estimate, the Bank of Japan's benchmark rate is expected to reach 2% by the end of 2027. The report noted that assuming inflation remains around 2%, the current rate is still close to the lower bound of the neutral rate range for the economy. The report also recommended that the Bank of Japan should continue to gradually raise rates to prevent the economy from overheating. The Bank of Japan previously estimated that Japan's nominal neutral rate is between 1.1% and 2.5%, but noted that the specific level is subject to significant uncertainty. (Jin10 Data)

Macro:

Data to be released today include France's Q1 ILO unemployment rate, France's April CPI monthly final reading, the eurozone Q1 GDP annual revised reading, the eurozone Q1 seasonally adjusted employment quarterly final reading, the eurozone March industrial output monthly rate, the US April PPI annual rate, and the US April PPI monthly rate.

In addition, attention should be paid to: Chicago Fed President Goolsbee participating in a Q&A session hosted by a local chamber of commerce; 2028 FOMC voter and Boston Fed President Collins speaking at the Boston Economic Club; Vice Premier He Lifeng leading a delegation to South Korea from May 12-13 for economic and trade consultations with the US side; US President Trump making a state visit to China.

Crude oil:

As of 11:41, oil prices in both markets fell. WTI was down 1.03%, and Brent was down 1.06%. Iran presented its "entry ticket" for nuclear talks with the US, including unfreezing assets and recognizing sovereignty over the Strait of Hormuz. Trump stated: When negotiating with Iran, I don't consider the financial situation of the American people, I don't consider anyone. Meanwhile, the US Secretary of Defense said the Iran ceasefire agreement remains in effect. (Jin10 Data)

American Petroleum Institute (API) data showed that US crude oil inventory fell for the fourth consecutive week last week, while gasoline inventory increased. US API crude oil inventory for the week ending May 8 was -2.188 million barrels, vs. expectations of -1.654 million barrels and a prior value of -8.141 million barrels. US API gasoline inventory for the week ending May 8 was 502,000 barrels, vs. expectations of -2.549 million barrels and a prior value of -6.107 million barrels.

The EIA Short-Term Energy Outlook report showed: if the Strait of Hormuz were closed through the end of June, crude oil prices would be $20/barrel higher than the current forecast assuming reopening by the end of May. (Jin10 Data)

Spot market overview:

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