Crude Oil Continued to Decline, Metals Showed Mixed Performance, SHFE Copper and SHFE Tin Fell Over 1%, SHFE Silver, Lithium Carbonate and Palladium Dropped Over 3% [SMM Midday Review]

SMM News, May 20:

Metals market:

As of the midday close, domestic market base metals mostly fell, with only SHFE nickel rising, up 0.51%. SHFE tin led the decline with a 1.41% drop, and SHFE copper fell 1.06%. Other metals declined less than 1%. Alumina main contract fell 0.15%, and casting aluminum main contract fell 0.11%.

In addition, lithium carbonate main contract fell 3.32%, polysilicon main contract rose 1.79%, and silicon metal main contract rose 0.35%. Europe containerized freight main contract rose 4.12% to 2,727.

Ferrous metals all fell except stainless steel, which rose 0.34%. Rebar fell 0.5%, and hot-rolled coil fell 0.35%. Coking coal and coke: coking coal fell 0.7%, and coke fell 0.51%.

Overseas market base metals: as of 11:34, only LME copper and LME nickel declined among overseas base metals, with LME copper down 0.28% and LME nickel down 0.27%. LME zinc was temporarily flat at $3,511/mt. LME aluminum and LME tin rose over 0.1%, with LME aluminum up 0.17% and LME tin up 0.19%. LME lead rose 0.1%.

Precious metals: as of 11:34, COMEX gold fell 1.03%, and COMEX silver fell 1.75%. In China, SHFE gold fell 1.97%, and SHFE silver fell 4.41%.

In addition, platinum main contract fell 2.7%, and palladium main contract fell 3.03%.

As of 11:34 on May 20, midday futures quotes for selected contracts:

Spot and fundamentals

Zinc:Today, the purchase sentiment for refined zinc in Shanghai was 2.06, and the shipments sentiment was 2.54. Today, there were few traders making shipments in the Shanghai market. Some traders continued to raise spot quotes, and spot premiums continued to rise. However, zinc futures maintained a fluctuating trend, and some downstream enterprises continued to hold a bearish view. Today, purchases were basically made on an as-needed basis, and overall spot cargo.......

Macro front

China:

[May LPR quotes released: both 5-year and 1-year rates remained unchanged for twelve consecutive months] The May Loan Prime Rate (LPR) quotes were released: authorized by the People's Bank of China, the National Interbank Funding Center announced that the LPR on May 20, 2026 was: 1-year LPR at 3.0%, and 5-year and above LPR at 3.5%. The above LPR rates remain effective until the next LPR release. This marked twelve consecutive months of no change.

[Li Lecheng chaired the 2026 plenary meeting of the Employment Promotion Leading Group of the Ministry of Industry and Information Technology]On May 19, Li Lecheng, Party Secretary, Minister, and head of the Employment Promotion Leading Group of the Ministry of Industry and Information Technology (MIIT), chaired the 2026 plenary meeting of the ministry's Employment Promotion Leading Group to thoroughly study and implement General Secretary Xi Jinping's important remarks on employment, implement the decisions and deployments of the CPC Central Committee and the State Council, and discuss and deploy key tasks for the ministry's employment promotion work in 2026. Ke Jixin, member of the Party Leadership Group of the Ministry, Vice Minister, and Deputy Head of the Ministry's Leading Group for Employment Promotion, attended the meeting. The meeting noted that the industry and information technology system must thoroughly study and implement General Secretary Xi Jinping's important remarks on employment, and resolutely shoulder the mission of promoting high-quality and full employment. Employment must be treated as the top priority of people's livelihood. In advancing new-type industrialization and building a manufacturing powerhouse and a cyber powerhouse, the system must adhere to the employment-first orientation, create high-quality jobs, cultivate and expand employment capacity, and achieve mutual empowerment and a virtuous cycle between industrial transformation and upgrading and employment expansion and quality improvement.

[MOFCOM: The Chinese government implements export controls on rare earths and other critical minerals in accordance with laws and regulations, and reviews compliant, civilian-use license applications]The head of the Department of American and Oceanian Affairs of the Ministry of Commerce provided an interpretation of the preliminary economic and trade outcomes. MOFCOM stated that the Chinese and US economic and trade teams conducted thorough communication and exchanges on export control issues, and both sides will jointly study and resolve each other's reasonable and legitimate concerns. The Chinese government implements export controls on rare earths and other critical minerals in accordance with laws and regulations, and reviews compliant, civilian-use license applications. China is willing to work with the US to create favorable conditions for promoting mutually beneficial cooperation between enterprises of both countries and safeguarding the security and stability of global industry chain and supply chains.

US dollar:

As of 11:34, the US dollar index was flat at 99.32. A CITIC Securities research report noted that as the US-Israel-Iran conflict continues to evolve, there is still no clear timetable for reopening the Strait of Hormuz, keeping crude oil prices elevated. If inflation rises further, it may become more difficult for the US Fed to cut interest rates, affecting the bull market in commodities. However, based on its analysis of statements by the new US Fed chair, CITIC Securities judged that the US Fed's response to high inflation may be less sensitive, and the policy mix may be "cut interest rates first, then reduce the balance sheet." The commodity market may see a favorable environment of inflation plus easing within the year. Combined with the bullish fundamentals of supply-demand imbalance facing most commodities, CITIC Securities believes the commodity bull market this year is worth looking forward to. According to the CME "FedWatch": the probability of the US Fed maintaining rates unchanged through June is 99%, with a 1% probability of a cumulative 25-basis-point interest rate cut. The probability of the US Fed maintaining rates unchanged through July is 84.4%, with a 0.8% probability of a cumulative 25-basis-point interest rate cut and a 14.8% probability of a cumulative 25-basis-point rate hike. (Jin10 Data APP)

A Huatai Securities research report noted that it is indeed difficult for the US Fed to cut interest rates again in H2 this year, and based on current trends, there may be a need for rate hikes next year. Huatai Securities' latest base case assumption is that the US Fed will keep policy rates unchanged this year, but guidance will be more hawkish than before. The neutral forecast for next year is two rate hikes, higher than current market expectations, primarily based on a relatively optimistic base case assumption for nominal growth. However, this forecast still faces numerous uncertainties including US economic fundamentals, geopolitical changes, and global growth. (Jin10 Data APP)

Other currencies:

Morgan Stanley Japan CEO Alberto Tamura said he expects the yen to appreciate to around 140 against the US dollar, and that Bank of Japan action is key to achieving this target. He stated that if the BOJ fails to raise rates in June, it will impact the government bond and currency markets; the yen could fall to 170 or rise to 140, depending on how events unfold.

Bank of America is no longer overly bearish on the yen, believing three catalysts could turn it outright bullish, even as the yen is pulling back toward the 160 level. The bank raised its yen view from neutral, citing improving structural fund flows while other major currencies face vulnerabilities. Strategist Yamada Shusuke lowered his year-end 2026 USD/JPY forecast from 157 to 152. Yamada said a shift to bullish would require policy changes or deteriorating market conditions, including USD/JPY hitting 160, 10-year JGB yields approaching 3%, or Brent crude oil falling below $90. Despite suspected intervention near 160 multiple times this year, the yen still weakened to that level. Sources said intervention began on April 30, and BOJ account analysis suggested total intervention may have reached 10 trillion yen (approximately $63 billion). Yamada noted that the yen has continued to weaken since 2024, with the divergence from interest rate differentials widening. However, "improving yen fund flows, narrowing bank deposit-loan spreads, and rising real rates" suggest that if fiscal concerns peak, China yields may begin to support the yen. He also pointed out that Japanese equities have outperformed the US and Europe, helping attract capital inflows and improving yen fundamentals.

Data:

Today will see the release of China's 1-year Loan Prime Rate as of May 20, UK April CPI m/m, UK April RPI m/m, Germany April PPI m/m, Eurozone April CPI y/y final, and Eurozone April CPI m/m final.

In addition, US SpaceX Starship V3 will attempt its maiden flight, 2026 FOMC voter and Philadelphia Fed President Paulsen will deliver a speech, and Fed Governor Barr will deliver a speech.

Crude oil:

As of 11:34, oil prices in both markets fell together, with WTI down 0.1% and Brent down 0.19%, as the market remained cautious about the outcome of US-Iran peace talks.

On May 19 local time, the US Central Command stated that US forces are continuing to fully enforce the maritime blockade against Iran, preventing commercial trade from entering or leaving Iranian ports. The US Central Command said that 89 commercial vessels have been redirected to ensure compliance with US blockade measures. (CCTV News) (Jin10 Data APP)

Sources revealed that India plans to send tankers through the Strait of Hormuz to load energy cargoes from the Middle East. This would be the first such move since the outbreak of the Iran conflict. Sources said the plan has been finalised and can be executed once final government approval is granted. The specific timing and volume have not been disclosed. Once approved by the Indian Navy and orders are received from refiners, state-owned Shipping Corporation of India will return to the Persian Gulf. Since the war with Iran began in late February, shipping through the Strait of Hormuz has nearly come to a standstill. The strait carries approximately one-fifth of global oil flows, and the disruption has severely impacted importing nations such as India. It remains unclear whether Iran or the US, which is enforcing the blockade, has granted passage for India, and their consent is crucial. Last week, Indian External Affairs Minister Jaishankar met with Iranian Foreign Minister Araghchi during the BRICS summit in New Delhi. Sources said India hopes to continue importing energy from traditional Middle Eastern suppliers, as alternative sources take longer and cost more. (Jin10 Data APP)

Citi forecasts Brent crude oil prices will reach $120 per barrel in the near term, and warned that the oil market is underestimating the risk of prolonged supply disruptions. If the Strait of Hormuz only slowly resumes navigation in Q3, prices could even surge to $150. In the research report, the forecast that global oil inventories will decline by 1 billion barrels this year is undoubtedly the most notable single data point: at this rate of depletion, the buffer between current supply conditions and a true "physical shortage" is rapidly narrowing; and the market's ability to absorb subsequent supply disruptions without triggering a price spike is weakening with each passing week. In Citi's "middle scenario" forecast for 2027, Brent crude oil prices are expected to remain in the range of $80 to $90 per barrel. This forecast assumes Iran will eventually regain control over shipping flows through the Strait of Hormuz and can match crude oil exports with expected demand growth; this implies that once supply returns to normal, oil prices will face a significant correction. (Jin10 Data APP)

Spot market overview:

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