US Dollar Fell; Metals Showed Mixed Performance; SHFE Zinc Dropped Over 1%; SHFE Lead, COMEX and SHFE Silver, Coking Coal and Coke, and Crude Oil Rose Over 1% [Overnight Market]

SMM News, August 28:

Metals market:

Overnight, base metals in both the Chinese and overseas markets showed mixed performance. LME aluminum, LME nickel, as well as SHFE zinc and SHFE nickel fell together, with SHFE zinc leading the declines, down 1.02%, while declines in the other metals fluctuated within a narrow range. SHFE lead led the gains, up 1.02%; LME tin rose 0.77% and LME copper rose 0.52%, while gains in the other metals were relatively small. The most-traded alumina contract rose 0.08%, and the most-traded casting aluminum contract fell 0.13%.

Overnight, ferrous metals mostly rose. Stainless steel fell 0.99%, while rebar and iron ore rose by around 0.7% together, with rebar up 0.78%, iron ore up 0.7%, and HRC up 0.66%. For coking coal and coke, coking coal rose 1.88% and coke rose 1.35%.

Overnight, in precious metals, COMEX gold rose 0.03% and COMEX silver rose 1.76%. In China, SHFE gold fell 0.18% and SHFE silver rose 1.35%.

As of 6:38 on August 28, overnight closing performance:

Macro front

In China:

[National Energy Administration and Jordan’s Ministry of Energy and Mineral Resources Sign Cooperation Documents] On August 24, during talks held in China between President Xi Jinping and King Abdullah II of Jordan, Wang Hongzhi, Administrator of the National Energy Administration, and Saleh Kharabsheh, Jordan’s Minister of Energy and Mineral Resources, officially announced the signing of the “Memorandum of Understanding on Energy Cooperation between the National Energy Administration of the People’s Republic of China and the Ministry of Energy and Mineral Resources of the Hashemite Kingdom of Jordan.” Next, the two sides will carry out exchanges and cooperation in areas including energy planning, power and renewable energy, and hydrogen energy.

[MOFCOM Assistant Minister Yuan Xiaoming Attends the National Meeting on Stimulating Consumption Vitality in Lower-Tier Markets] According to MOFCOM’s official website, on August 26-27, the National Meeting on Stimulating Consumption Vitality in Lower-Tier Markets was held in Beijing. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the meeting thoroughly implemented the guiding principles of the 20th National Congress of the CPC and the plenary sessions of the 20th CPC Central Committee, carried out the relevant arrangements in the “Opinions of MOFCOM and Eight Other Departments on Further Stimulating Vitality in Lower-Tier Markets and Boosting County-Level Consumption,” accurately analyzed the situation and requirements facing the development of lower-tier markets at present and in the period ahead, and systematically deployed key tasks for stimulating consumption vitality in lower-tier markets during the 15th Five-Year Plan period, helping build a strong Chinese market and advance comprehensive rural revitalization. MOFCOM Assistant Minister Yuan Xiaoming attended the meeting and delivered remarks.

[MIIT: Automakers Should Submit Self-Inspection and Rectification Results by Month-End December 2026; Those Finding Defects Should Proactively Initiate Recalls] The general offices of MIIT and three other departments issued a notice on launching a special campaign to improve production consistency and quality of road motor vehicle products. The notice proposed organizing enterprises to conduct self-inspection and self-correction. Local industrial and information technology authorities shall organize key local road motor vehicle producers to comprehensively carry out self-inspection and self-correction against access management requirements and key rectification issues, systematically identify problems in areas such as product production consistency, reliability, durability, and testing and verification of new technologies for both the enterprises themselves and key parts suppliers, earnestly complete rectification work, comprehensively strengthen supply chain management, and enhance capabilities to ensure production consistency. Enterprises shall submit their self-inspection and self-correction results to local industrial and information technology authorities by month-end December 2026. For any defects identified, enterprises shall promptly file recall plans with the State Administration for Market Regulation and proactively implement recalls. Local industrial and information technology authorities shall fulfill their local responsibilities, urge and guide local enterprises to strengthen testing and verification for aggressive innovative design of automotive products, fully assess safety risks, and steadily and prudently promote the application of new technologies in vehicle installation.

[DCE Issues an Announcement on Expanding the Contracted Capacity of Designated Warehouses for the Coking Coal and Coke Products]DCE announced that, in accordance with relevant provisions including the Measures for the Administration of Designated Delivery Warehouses of Dalian Commodity Exchange and the Provisions on the Qualification and Supervision Administration of Designated Delivery Warehouses of Dalian Commodity Exchange, it has decided after study that: the contracted capacity of the designated coking coal warehouse of Tianjin port Coke Terminal Co., Ltd. will be expanded from 150,000 10kt to 200,000 10kt. The contracted capacity of the designated coke warehouse of Tianjin port Coke Terminal Co., Ltd. will be expanded from 200,000 10kt to 250,000 10kt. The above matters shall take effect as of the date hereof.

US dollar:

As of the overnight close, the US dollar index fell 0.01% to 99.13. The number of people in the US filing initial jobless claims declined last week, indicating that despite an unexpected drop in employment in July, the US labour market remained stable. The US Department of Labor said on Thursday that for the week ended August 22, initial claims, seasonally adjusted, fell by 4,000 to 203,000, versus economists’ expectations of 208,000. Initial claims are currently at the lower end of this year’s range of 189,000 to 230,000, indicating that even as hiring activity weakens, layoffs remain low. The US unemployment rate edged down again last month to 4.1%, a historic low. If the labour market continues to remain stable, the US Fed may be able to keep its focus on controlling inflation. US inflation has been above the US Fed’s 2% target for 65 consecutive months. Data showed that continuing claims fell by 18,000 to 1.778 million, a metric that can serve as a reference for hiring conditions. (Jin10 Data APP)

US Fed’s Hammack reiterated that now is the time for officials to take action to curb inflation. She said the current interest rates were still not strong enough to cool the economy and could not allow price pressures to fade on their own. She said, “I think the appropriate course right now is to maintain some degree of restrictiveness to help inflation pull back to the target level. The longer inflation remains above our target, the harder it will be to bring it down.” Hammack was one of three officials who dissented at last month’s policy meeting, and she favored raising rates by 25 basis points. She said, “In my view, when inflation stays away from our target for a long time, the real issue is that the public may start to develop an inflation mindset.” She added that she had not yet seen that happen, but conversations with some people left her concerned. Hammack also said capital market performance suggested current rates were not putting enough pressure on credit or economic growth. She said, “We’re seeing IPOs on the order of $1 trillion, and we’re also seeing record-sized debt issuance. From my perspective, this doesn’t look like the economy is being constrained.” (Jinshi Data APP)

According to CME “FedWatch”: the probability that the US Fed will keep rates unchanged through September is 63.5%, and the probability of a cumulative 25-basis-point hike is 36.5%. The probability that the US Fed will keep rates unchanged through October is 47.3%; the probability of a cumulative 25-basis-point hike is 43.4%, and the probability of a cumulative 50-basis-point hike is 9.3%. (Jinshi Data APP)

Boston Fed President Collins said that if future data showed inflation pulling back less than expectations, she might support the US Fed raising rates at the next meeting. She noted this week that if there was no clear evidence of continued improvement in inflation, then further policy tightening “soon” might be appropriate. When asked whether “soon” meant the next one or two meetings, Collins said candidly, “Possibly, yes.” Collins believed the July inflation report was broadly consistent with her assessment. Although core inflation was slightly higher than expectations, after excluding some items whose prices are difficult to observe directly, the data were “more encouraging.” She still expected that even without rate hikes, inflation would cool gradually. She also disclosed that her latest forecast submitted in June was for rates to remain unchanged through the end of this year, and she believed the current level of rates was “mildly restrictive” for the economy. (Jinshi Data APP)

On the macro front:

Today will see the release of the US August Chicago PMI, the final US August University of Michigan Consumer Sentiment Index, the final US August one-year inflation expectations, and the preliminary US 2026 nonfarm payroll benchmark revision; the eurozone August Industrial Confidence Indicator and the eurozone August Economic Sentiment Indicator; Switzerland’s August KOF Leading Indicator; Germany’s August seasonally adjusted unemployment change and Germany’s August seasonally adjusted unemployment rate; France’s preliminary August CPI m/m and France’s final Q2 GDP y/y; Canada’s June GDP m/m; and data including this July unemployment rate.

In addition, China’s refined oil products will open a new round of price-adjustment window, and Fed Chair Walsh will deliver a speech for the first time at the Jackson Hole Global Central Banking Annual Meeting.

Crude oil:

Overnight, oil prices in both markets rose, with WTI up 1.59% and Brent up 1.76%. According to The Wall Street Journal, citing people familiar with the matter, the Trump administration has repeatedly told mediators that it has no intention of re-accepting the terms of the memorandum of understanding reached with Iran in June this year. Trump has now shifted to pressuring Iran through economic means and is willing to wait and see whether this strategy will work. The June agreement originally planned to reopen the Strait of Hormuz and launch negotiations on the nuclear issue and ending the war in exchange for easing sanctions and allowing Iran to access frozen funds outside China, among other measures, but it collapsed several weeks later after Iran attacked vessels. Iran, for its part, insists that the US resume implementation of the June agreement and believes that Article 5 of the agreement effectively recognizes Iran’s right to decide the conditions for opening the Strait of Hormuz. Iran’s Islamic Revolutionary Guard Corps said that Iran will reopen the strait only if the US resumes implementation of the agreement, grants Iran exemptions for oil sales, and ends the maritime blockade. Recently, Pakistan, Oman, and Qatar have successively launched mediation efforts, but progress has been limited. Analysts said the memorandum of understanding reached in June has in fact already become invalid, and both sides are currently preparing for an escalation of the situation. (Jinshi Data APP)

On the 27th local time, Rezai, Secretary of Iran’s Supreme National Security Council, said that Iran has prepared a list of conditions to present to the US. It has currently allowed vessels to temporarily pass through specific lanes in the middle of the Strait of Hormuz, but future passage through the strait will be subject to the memorandum of understanding signed with the US. (CCTV) (Jinshi Data APP)

According to foreign media reports, Kuwait and Qatar, two relatively small oil-producing countries in the Persian Gulf, are increasing crude oil shipments through the Strait of Hormuz, further driving a rebound in oil transport volumes along the waterway. Traders said that before the outbreak of the Iran war, the two countries together exported about 2 million barrels of oil per day, and exports have now recovered to 70% of pre-conflict levels. The UAE was the first Gulf oil producer to resume large-scale oil exports through the Strait of Hormuz, using a method known as “shuttle transport” to conduct ship-to-ship transfers in the Gulf of Oman. Saudi Arabia later joined in. Traders said that about 7 million to 8 million barrels of oil are currently shipped out through the Strait of Hormuz each day, higher than about 4 million barrels in mid-July, equivalent to about three-quarters of pre-war levels. Vortexa said on Monday that oil flows transported through the waterway are close to 10 million barrels per day. (Jin10 Data APP)

According to sources, Venezuela is seriously reviewing a plan to withdraw from OPEC. It is reported that discussions about a withdrawal have already begun with US officials, but no final decision has been made. Venezuela was once an important OPEC member, but its importance has now diminished significantly. Given that Venezuela’s oil production has already declined, its potential withdrawal is unlikely to have a major direct impact on the global oil market. However, Venezuela’s withdrawal would intensify doubts about whether Saudi-led OPEC can remain united and continue to influence crude oil prices. One informed source disclosed that some US officials envision building an “oil powerhouse” through an alliance between the US and Venezuela, which would greatly weaken OPEC’s influence. Another informed source said that although, given the extent of Venezuela’s sharp decline in oil production in recent years, the country is currently not subject to OPEC production limits, exempting it from any production quota restrictions that may be implemented in the future would help it maximize production in the long term, thereby pushing oil prices lower. The US would also be able to advance its plans regarding Venezuelan oil. In addition, this move would pave the way for international oil companies from the US and other countries to play a greater role in helping the country rebuild its oil industry, potentially exacerbating the global crude oil surplus in the coming years as forecast by institutions. (Jin10 Data APP)