Crude Oil Declined, Most Metals Fell, Lithium Carbonate Dropped Over 3%, LME Tin, Iron Ore, and Coke Fell Over 1% [SMM Midday Review]

SMM News, May 19:

Metals market:

As of the midday close, base metals on the domestic market mostly fell. SHFE copper dropped 0.14%. SHFE aluminum rose 0.66%. SHFE lead edged up, and SHFE zinc fell 0.28%. SHFE tin dropped 0.43%. SHFE nickel edged down.

In addition, the most-traded casting aluminum alloy futures rose 0.68%, and the most-traded alumina contract fell 0.69%. The most-traded lithium carbonate contract fell 3.74%. The most-traded silicon metal contract fell 0.3%. The most-traded polysilicon futures fell 0.92%.

Ferrous metals all fell. Iron ore dropped 1.24%, rebar fell 0.93%, hot-rolled coil fell 0.73%, and stainless steel fell 0.71%. Coking coal and coke: the most-traded coking coal contract fell 0.81%, and the most-traded coke contract fell 1.22%.

Overseas base metals: as of 11:41, LME metals nearly all declined. LME copper fell 0.57%. LME aluminum edged up 0.04%. LME lead fell 0.25%. LME zinc fell 0.1%. LME tin fell 1.14%. LME nickel fell 0.27%.

Precious metals: as of 11:41, COMEX gold fell 0.13%, and COMEX silver fell 0.74%. Domestic precious metals: the most-traded SHFE gold contract rose 0.17%, and the most-traded SHFE silver contract rose 0.22%.

In addition, as of the midday close, the most-traded platinum futures rose 0.22%, and the most-traded palladium futures fell 0.31%.

As of the midday close, the most-traded Europe containerized freight index contract rose 1.84%, closing at 2,631.5 points.

As of 11:41 on May 19, midday futures quotes for selected contracts:

Spot and Fundamentals

Zinc:Today, mainstream transaction prices for #0 zinc were concentrated at 24,495-24,675 yuan/mt, Shuangyan was mainly traded at 24,605-24,775 yuan/mt, and #1 zinc was mainly traded at 24,425-24,605 yuan/mt. In the morning session, the market quoted spot premiums of 30-40 yuan/mt against the SMM average price, with no quotes against futures for the time being...

Macro Front

China:

[Preview: The State Council Information Office will hold a press conference to introduce preparations for the 4th China International Supply Chain Expo]The State Council Information Office will hold a press conference at 10:00 AM on May 22, 2026 (Friday). Li Xingqian and Liu Jiannan, Vice Chairpersons of the China Council for the Promotion of International Trade (CCPIT), will introduce preparations for the 4th China International Supply Chain Expo and answer questions from reporters. (Wallstreetcn)

[Fujian: By 2030, the province's optoelectronic industry cluster revenue to exceed 300 billion yuan, accelerating R&D of high-speed optical modules] Recently, the "Fujian Province 15th Five-Year High-Quality Development Action Plan for the Optoelectronic Industry Cluster (Draft for Public Comments)" was released for public consultation. It mentioned that by 2030, the province's optoelectronic industry cluster revenue will exceed 300 billion yuan, with the preliminary establishment of an optoelectronic industry cluster featuring a complete chain, a well-developed ecosystem, and international influence. In the optical communication field, targeting scenarios such as AI computing center interconnection and high-speed data center interconnection, the focus will be on developing high performance coherent optical systems (OCS), linear-drive pluggable optical modules (LPO), near-packaged optics (NPO), co-packaged optics (CPO), Micro LED+CPO multi-channel low-power optical communication, and silicon photonics technologies. The plan aims to accelerate R&D and industrialisation of key products and technologies including ≥200G EML, ≥800mW large power lasers, and ≥800G high-speed optical modules. It will support leading enterprises in expanding into specialty segments such as submarine optical cables and high performance optical cables, and continue to improve and enhance the optoelectronic industry chain.

US dollar:

As of 11:41, the US dollar index rose 0.1% to 99.08. According to Fox Business, citing White House officials on Monday, Warsh will be sworn in as Fed Chairman at a ceremony at the White House on Friday, presided over by Trump. The US Senate approved Warsh as Fed Chairman last Wednesday. The 56-year-old lawyer and financier will take the helm of the US central bank. The US Fed is currently facing intensifying inflationary pressures, which may make it difficult to implement the interest rate cuts demanded by Trump. As Trump's nominee for Fed Chairman, Warsh's appointment is expected to bring a fresh start to the relationship between the Trump administration and the US Fed. Over the previous eight years, friction between the White House and the US Fed was persistent, compounded by a global pandemic and the fight against high inflation. Warsh will take over leadership from Powell. (Jin10)

The sharp rise in US Treasury yields this month may be nearing its peak. Analysts at JPMorgan said: "We no longer think the risks are skewed toward higher yields." They said: "Money market pricing reflects a more hawkish policy outcome than our base case, and valuations have corrected." According to CME data, the market largely expected the US Fed to keep rates unchanged, but the probability of a rate hike was also increasing. Longer-dated bonds appeared undervalued. JPMorgan said: "We think this bearish repricing offers an opportunity to add duration." (Jin10)

A CICC research report noted that multiple recent US inflation data points exceeded expectations, while the labor market stabilized. Bonds sold off, and market concerns about inflation continued to intensify. Meanwhile, US-Iran peace negotiations showed no substantive progress, and the Strait of Hormuz remained effectively closed, making it difficult for upside risks to energy prices to dissipate. In the base case, CICC expected US PCE inflation to remain above 3.5% for the full year, with core PCE inflation above 3%, both significantly higher than the US Fed's 2% policy target. Against this backdrop, the US Fed's policy stance is expected to shift toward greater caution, with further interest rate cuts unlikely within the year (previously, the next rate cut was expected in Q4). After new Chairman Warsh takes office, establishing policy credibility will be the top priority. Timely communication of clear anti-inflation signals to the market is both a proper course of action and a necessary step to stabilize expectations. For markets, this means a rising probability of marginal tightening in US dollar liquidity, and assets driven purely by liquidity may remain under pressure.

Other currencies:

The Reserve Bank of Australia stated in its latest meeting minutes that raising rates for a third consecutive meeting would give it room to monitor how households and businesses are coping with the impact of the Middle East conflict that has caused fuel prices to surge. The minutes showed: "Although uncertainty remains, financial conditions are likely to tighten somewhat following this decision." According to the minutes, committee members discussed whether to raise rates or hold steady, with eight of the nine-member committee deciding there was a stronger case to raise rates to 4.35%. The minutes showed that the rate hike "would give the committee room to observe how the Middle East conflict develops and how households and businesses respond." The committee acknowledged that policy actions could not change the "short-term trajectory" of inflation. Money markets expected the RBA to raise rates at least once more this year, with more than a 50% probability of two more hikes. After raising rates again two weeks ago, the RBA has fully reversed all of last year's easing. (Jin10)

Data:

Data to be released today include the US weekly ADP employment change for the week ending May 2, the US April pending home sales index MoM, the eurozone March seasonally adjusted trade balance, the UK March three-month ILO unemployment rate, the UK April unemployment rate, the UK April claimant count change, and the Canada April CPI MoM.

Crude oil:

As of 11:41, both benchmarks fell. WTI crude dropped 1.56%, and Brent crude fell 2.02%. The US extended the sanctions waiver on Russian seaborne oil for another 30 days. At the request of Gulf allies, Trump cancelled the military strike on Iran originally scheduled for May 19, and international oil prices plunged in response. (Jin10)

On May 18 local time, International Energy Agency (IEA) Executive Director Fatih Birol, attending the G7 finance ministers' meeting in Paris, France, said that commercial oil inventories were "declining sharply" due to the Middle East conflict, with only "weeks of coverage remaining." Birol said the IEA's decision in March to coordinate member states' release of strategic petroleum reserves could increase daily market supply by about 2.5 million barrels, but these reserves were "not inexhaustible," and all parties should recognize the urgency of the situation. The IEA's latest monthly oil report released on May 13 showed that in March and April, global observable oil inventories, including offshore crude, fell by 250 million barrels, equivalent to a daily average decline of 4 million barrels. As the summer demand peak approaches, international oil prices may fluctuate further. (CCTV)

In addition, according to Nikkei, Japanese Prime Minister Takaichi Sanae and South Korean President Lee Jae-myung are expected to agree at a summit on Tuesday to establish a framework for cooperation in crude oil procurement, including the creation of a joint reserve mechanism. Takaichi will visit South Korea from Tuesday to Wednesday as part of ongoing "shuttle diplomacy" between the two countries. The Middle East situation is expected to be a key topic of the talks. The joint reserve plan will utilize the "Partnership on Worldwide Energy and Resource Resilience" (POWERR), an energy framework for cooperation with Southeast Asia announced by Takaichi in April. POWERR Asia aims to support the development of energy supply systems, particularly in Asian countries with insufficient oil reserves. Financial support will be provided through institutions such as the Japan Bank for International Cooperation (JBIC) when enterprises procure crude oil from regions outside the Middle East. Japan and South Korea will not only cooperate on financial support but also jointly provide technical assistance to build oil reserve systems. (Jin10)

Spot market overview:

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