Weaker Dollar, Crude Oil Rose for Two Straight Sessions; Most Base Metals Fell, SHFE Tin Down Over 1%, UBS Up Over 1% [Overnight Market]

SMM News, August 18:

Metals market:

Overnight, base metals in the domestic market mostly fell. SHFE copper fell 0.84%. SHFE aluminum fell 0.19%. SHFE zinc fell 0.48%, and SHFE tin fell 1.47%. SHFE lead edged up, while SHFE nickel edged down. In addition, the most-traded alumina futures contract fell 0.56%, and the continuous casting aluminum contract fell 0.71%.

Overnight, ferrous metals mostly rose. Stainless steel rose 0.32%, iron ore rose 0.14%, and rebar fell 0.3%. Hot-rolled coil rose 0.18%. For coking coal and coke: the most-traded coking coal contract fell 0.18%, while the most-traded coke contract rose 0.23%.

Overnight, in overseas metals, LME base metals mostly moved lower. LME copper fell 0.3%. LME aluminum rose 0.45%. LME lead fell 0.55%. LME zinc fell 0.11%. LME tin fell 0.49%. LME nickel fell 0.36%.

Overnight, precious metals : COMEX gold extended the previous trading day’s gains, rising 0.81%, while COMEX silver rose 1.22%. Overnight, the continuous SHFE gold contract extended the previous trading day’s gains, rising 0.41%, while the continuous SHFE silver contract rose 0.82%.

As of 7:16 on August 18, overnight closing prices:

Macro front

China:

[The Ministry of Commerce and other departments jointly issued the “Opinions on Further Stimulating the Vitality of Lower-Tier Markets and Boosting County-Level Consumption”] The Ministry of Commerce and eight other departments released the “Opinions on Further Stimulating the Vitality of Lower-Tier Markets and Boosting County-Level Consumption,” which proposed accelerating the renewal of existing commercial facilities. It supports the upgrading and renovation of traditional department stores and aging shopping malls, and promotes optimized layout for branded chain stores, discount retail stores, and fresh e-commerce storefronts, among others. It will deepen the renovation and upgrading of the “1,000 Markets and 10,000 Stores” initiative, support the construction and upgrading of township commercial and trade centers, (agricultural) trade markets, and distinctive township fairs, and carry out standardized and regulated construction and renovation of new-type convenience stores and village-level integrated postal and express logistics service stations.

[National Bureau of Statistics (NBS): From January to July, value-added industrial output above designated size nationwide grew 5.3%, and the national economy maintained a development trend toward new drivers, higher quality, and improvement] According to the National Bureau of Statistics (NBS): From January to July, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments conscientiously implemented the decisions and arrangements of the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while ensuring stability, effectively responded to various external shocks and internal difficulties, focused on implementing more proactive and effective macro policies, and solidly advanced high-quality development. Production and supply grew steadily, employment and prices were generally stable, resilience in foreign trade continued to stand out, new drivers of growth expanded and strengthened, and overall economic performance remained stable, sustaining a development trend of shifting momentum toward new drivers and optimizing the structure. From January to July, the value added of industrial enterprises above the designated size nationwide increased by 5.3% YoY. By three major sectors, value added increased by 2.5% YoY in mining, 5.6% in manufacturing, and 5.4% in the production and supply of electricity, heat, gas, and water. Value added increased by 9.7% YoY in the equipment manufacturing industry and 13.8% in high-tech manufacturing, respectively 4.4 and 8.5 percentage points faster than overall industrial enterprises above the designated size.

[National Development and Reform Commission (NDRC) and National Energy Administration Issue the 15th Five-Year Plan for Oil and Natural Gas Development]The National Development and Reform Commission (NDRC) and the National Energy Administration issued the 15th Five-Year Plan for Oil and Natural Gas Development. It proposed that by 2030, China’s oil and gas supply will reach 440 million mt of oil equivalent; newly added long-distance oil and gas pipelines will total 20,000 km; the nationwide long-distance oil and gas pipeline network will reach 220,000 km; natural gas storage capacity will continue to increase, accounting for more than 13% of national consumption; LNG receiving terminals will have a throughput capacity of 200 million mt/year; the capacity for imported natural gas via onshore pipelines will reach 114 billion m³/year; and annual CO₂ injection under carbon capture and storage/carbon capture, utilization and storage (CCS/CCUS) will reach 10 million mt.

[NDRC Deploys Efforts to Accelerate the Deployment of New-Type Policy-Based Financial Instruments in 2026 and Increase Support for Private Investment Projects]On August 14, Comrade Yue Xiuhu, a member of the Party Leadership Group and Vice Chairman of the National Development and Reform Commission (NDRC), chaired a working meeting to deploy efforts to accelerate the deployment of new-type policy-based financial instruments in 2026 and increase support for private investment projects. Officials in charge from some provincial development and reform commissions, as well as officials in charge from China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China, and officials in charge from relevant departments and bureaus of the NDRC attended the meeting. Next, the NDRC will earnestly implement the decisions and arrangements of the CPC Central Committee and the State Council, actively work with relevant parties, and further accelerate all related work on the new-type policy-based financial instruments for 2026. (NDRC)

[Li Bin of the State Administration of Foreign Exchange: Since July, China’s Foreign Exchange Market Has Remained Stable]In response to reporters’ questions on foreign exchange market conditions in July 2026, Li Bin, Deputy Administrator of the State Administration of Foreign Exchange, said that since July, the external environment has been complex and volatile, geopolitical uncertainty has risen, and international financial markets have continued to fluctuate. China’s foreign exchange market has remained stable, the scale of cross-border receipts and payments has expanded steadily, market expectations have been generally stable, and foreign exchange transactions have been rational and orderly. In terms of the scale of cross-border transactions, in July, total cross-border receipts and payments of non-bank sectors such as enterprises and individuals amounted to $1.7 trillion, up 20% YoY; foreign exchange market trading volume was $4.3 trillion, up 8% YoY, both remaining at relatively high levels. From the perspective of cross-border capital flows, in July, net cross-border capital inflows of $59.8 billion were recorded for non-bank sectors such as enterprises and individuals. Among these, net capital inflows under trade in goods remained high, while net capital outflows under trade in services and items such as dividend and interest payments by foreign-invested enterprises remained stable. From the perspective of foreign exchange market supply and demand, in July, banks posted a surplus of $18.3 billion in foreign exchange settlement and sales, with enterprises conducting settlement and sales transactions rationally based on actual needs and changes in market conditions; foreign exchange market supply and demand were basically balanced. (State Administration of Foreign Exchange)

US Dollar:

Overnight, the US dollar index extended the declines of the previous two trading days, falling a further 0.06% to 99.58. On Monday local time, US Treasury yields broadly moved higher. The 30-year Treasury yield, which is typically more sensitive to geopolitical events, rose by more than 4 basis points to 5.311%, the highest level since June 2007. The 10-year Treasury yield—the key benchmark rate for mortgages, auto loans, and credit card debt—rose by more than 2 basis points to 4.724%. The 2-year Treasury yield, which usually fluctuates in line with US Fed short-term rate decisions, rose by more than 1 basis point on Monday to 4.182%. Oil prices climbed as the 60-day deadline for the US-Iran peace agreement was set to expire on Monday, and Iran had ruled out the possibility of an extension. Investors were awaiting the release of the US Fed meeting minutes later this week to gain further insight into the US Fed’s latest monetary policy decision and the future path of interest rates. At its July 29 meeting, the US Fed voted 9–3 to keep rates unchanged in the 3.50% to 3.75% range. The three dissenting committee members—Hammack, Kashkari, and Logan—called for a 25-basis-point rate hike.

According to CME “FedWatch”: the probability that the US Fed will keep rates unchanged through September was 65%, and the probability of a cumulative 25-basis-point hike was 35%. The probability that the US Fed will keep rates unchanged through October was 51.4%, the probability of a cumulative 25-basis-point hike was 41.3%, and the probability of a cumulative 50-basis-point hike was 7.4%.

Citadel Securities said that after inflation had remained above target for an extended period, the US Fed’s continued reluctance to tighten monetary policy had kept long-term bond yields at multi-year highs and posed broader risks to the overall market. Noshad Shah, head of EMEA fixed income sales at Citadel Securities, said that although the policy rate was already 175 basis points below its peak, long-term US Treasury yields were still at their highest levels in nearly 20 years. Shah said: “In my view, this reflects the market’s belief that whether it is the US Fed or the fiscal authorities, when policymakers face difficult choices, they often tend to choose the easier path.”“As long as this situation persists, it will continue to pose risks to the broader market.” On Monday, the US 30-year Treasury yield climbed to a 19-year high, breaking above 5.28%. Data released last week showed that both inflation and consumer demand had slowed down, prompting the bond market to scale back expectations for a US Fed interest rate cut in September. Shah warned that the recent improvement in inflation and a weakening labor market should not be interpreted as meaning interest-rate risks have been eliminated. He noted that more than 55% of core goods prices were still rising. As a result, he believed the US Fed’s policy meeting next month would be a “dead heat.”

Goldman Sachs said that, with US inflation cooling, market expectations for US Fed interest rate hikes remained overly aggressive. Goldman’s chief economist Jan Hatzius wrote in a report that, due to weak retail sales, disappointing employment data, and continued slowing in inflation, the likelihood of a US Fed rate hike at the September meeting was “very low”. Hatzius wrote: “Based on our baseline economic forecast, over time the probability that inflation data improve further is higher than the probability that they deteriorate again. We still believe the market’s pricing of the federal funds rate is too hawkish.” Data showed that the market had pushed back expectations for the next 25-basis-point US Fed rate hike to January next year, whereas a week earlier the market had fully expected the US Fed to hike in December. Goldman Sachs believed that, although market pricing was no longer as hawkish, there was still room for expectations for interest rate hikes to fade further. (Jinshi Data)

On the macro front:

Data due to be released today included the UK three-month ILO unemployment rate for June, the UK unemployment rate for July, the UK claimant count for July, Germany’s ZEW Economic Sentiment Index for August, the eurozone ZEW Economic Sentiment Index for August, the weekly change in US ADP employment for the week ending August 1, US annualized housing starts for July, total US building permits for July, the US import price index month-on-month for July, US industrial output month-on-month for July, and the US pending home sales index month-on-month for July. In addition, watch for: Xiaomi Group’s earnings conference call; Baidu’s earnings conference call.

On crude oil:

Overnight, both crude oil futures extended the previous session’s gains and continued to rise, with WTI up 3.09% and Brent up 2.91%. The US-Iran memorandum of understanding signed in June this year technically expired on Monday.

With the expiration of the US-Iran ceasefire escalating tensions, oil prices strengthened. According to CCTV News, on August 17 local time, US President Trump made it clear that he was not seeking to extend the memorandum of understanding with Iran, and said there was "no timetable" for resolving the Iran issue, adding that he "was not in a hurry". Iran issued a tough response in tandem. US Energy Secretary Wright said the US would “fight a long war” against Iran, and Treasury Secretary Bessent hinted that new economic sanctions are expected to be introduced soon. Russia, meanwhile, has faced fuel shortages after Ukraine’s sustained strikes on refineries, and two regions have implemented gasoline rationing. Arne Lohmann Rasmussen, Chief Analyst at Global Risk Management, said that more oil being shipped through the Strait of Hormuz, combined with the US shift toward economic sanctions, is depressing the geopolitical premium and capping upside room for oil prices; however, the economic pressure strategy means the strait could be closed for months. (Wallstreetcn)

Saudi Arabia is providing oil supplies loaded near the coast of Oman, indicating the country may be following the UAE’s lead by transshipping more crude oil through the Strait of Hormuz. According to people familiar with the matter, Saudi Aramco is supplying crude cargoes loaded at locations such as Sohar in the Gulf of Oman via ship-to-ship transfers. The cargoes involved are Arab Medium and Arab Heavy crude, suggesting the crude is highly likely to originate from the Persian Gulf. Saudi Aramco CEO Nasser said in March that the Yanbu pipeline mainly carries Arab Light and Arab Extra Light crude. He said at the time that the country’s offshore oil fields are primarily located in the Persian Gulf, forming the country’s supply of medium and heavy oil. Saudi Aramco declined to comment on the above information. (Jinshi Data APP)