Metals Showed Mixed Performance, with Lithium Carbonate and SHFE Aluminum Leading the Declines, Polysilicon Falling More Than 5%, and Stainless Steel Rising Nearly 3% [SMM Midday Review]

June 16 (SMM) —

Metals market:

As of the midday close, base metals on the domestic market mostly rose. SHFE copper fell 0.47%, SHFE aluminum lost 1.69%, SHFE lead gained 0.96%, SHFE zinc added 0.45%, SHFE tin climbed 1.17%, and SHFE nickel edged up 0.27%.

In addition, the most-traded bonded aluminum futures contract dropped 1.03%, the most-traded alumina contract fell 0.48%, the most-traded lithium carbonate contract slid 2.4%, the most-traded silicon metal contract lost 1.6%, and the most-traded polysilicon futures contract tumbled 5.01%.

Ferrous metals mostly fell. Iron ore dipped 0.2%, rebar declined 0.38%, HRC edged down 0.24%, while stainless steel surged 2.67%. In the coking coal and coke segment, the most-traded coking coal contract fell 0.74%, while the most-traded coke contract rose 0.1%.

On the overseas base metals front, as of 11:39, LME metals showed mixed performance. LME copper fell 0.48%, LME aluminum lost 0.71%, LME lead gained 0.18%, LME zinc added 0.14%, LME tin dropped 0.63%, and LME nickel rose 0.34%.

In precious metals, as of 11:39, COMEX gold fell 0.21% and COMEX silver lost 0.68%. On the domestic precious metals side, the most-traded SHFE gold contract gained 1.63% and the most-traded SHFE silver contract rose 1.65%.

Additionally, as of the midday close, the most-traded platinum futures contract fell 1.44% and the most-traded palladium futures contract lost 1.33%.

As of the midday close, the most-traded containerized freight index (European service) futures contract gained 1.42% to 3,834 points.

Selected futures midday prices as of 11:39 on June 16:

Spot and fundamentals

Silver: In the spot market, overall quoted price spreads remained wide today. The consumer market showed overall weakness in mid-to-late June, with the continued rally in silver prices dampening some demand...

Macro front

China:

[National Bureau of Statistics: Value-added of industrial enterprises above designated size grew 4.5% in May; national economy ran generally stable and progressed toward new, higher-quality growth] In May, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments earnestly implemented the decisions and arrangements of the Central Committee and the State Council. They adhered to the general principle of pursuing progress while maintaining stability, fully and faithfully applied the new development philosophy on all fronts, accelerated the building of a new development paradigm, earnestly carried out more proactive and impactful macro policies, and effectively addressed external shocks and challenges. Production and supply rose steadily, employment and prices remained generally stable, foreign trade continued to demonstrate resilience, new growth drivers grew stronger, and the national economy sustained a development trend of overall stability while progressing toward new, higher-quality growth. NBS data showed that in May, the value-added of industrial enterprises above designated size grew by 4.5% YoY in real terms, with the growth rate accelerating by 0.4 percentage points from the previous month. On a MoM basis, the value-added of industrial enterprises above designated size increased by 0.40% in May. From January to May, it grew by 5.4% YoY.

[From Scale Expansion to Resilience Allocation 《China Bulk Commodity Development Report》 Released] The China Federation of Logistics and Purchasing today (June 16) released the *China Bulk Commodity Development Report (2026)*. According to the report, China remains one of the most important import markets for bulk commodities globally, with imports of crude oil, iron ore, soybeans and other commodities staying at high levels. In the face of challenges, the bulk commodity market has shown enhanced resilience. The report indicates that China's bulk commodity market from 2025 to 2026 has generally exhibited a fundamental pattern of "macro pressure, market divergence, intensifying external shocks, enhanced trade resilience, and accelerated capacity building." China's bulk commodity trade is shifting from scale expansion to resilience-oriented allocation. In 2025, China's merchandise trade scale maintained relatively strong resilience, and major bulk commodity imports remained at high levels. Among them, imports of crude oil, iron ore, soybeans and other commodities continued to demonstrate the global absorption capacity of the Chinese market. (CCTV News)

[PBOC Reverse Repo Net Injection Today of RMB 296.5 Billion] The PBOC today conducted RMB 449.5 billion of 7-day reverse repo operations. As RMB 153 billion of 7-day reverse repo matured today, the net injection reached RMB 296.5 billion for the day.

As for the US dollar:

As of 11:39, the US dollar index rose 0.02% to 99.69. According to the CME "FedWatch": the probability that the Fed keeps rates unchanged in June is 98.5%, with a 1.5% probability of a cumulative 25 bp rate cut. The probability that the Fed keeps rates unchanged through July is 91.3%, a cumulative 25 bp rate hike is 7.4%, and a cumulative 25 bp rate cut is 1.4%.

Falconio Leslie, head of taxable fixed income strategy at UBS Global Wealth Management, said that after the US and Iran announced a deal, oil prices pulled back, the US Treasury market strengthened, and pressure on the Fed to raise rates this year was easing. Falconio Leslie said: "Even before the ceasefire agreement was reached, oil prices had already started to pull back, yet the two-year US Treasury yield continued to rise because the market had priced in a near-100% probability of a rate hike in December.""The current situation is that oil prices are falling, and the market is gradually withdrawing these rate hike expectations. As a result, the two-year US Treasury yield has started to pull back." The newly appointed Fed Chairman Wash will chair his first interest rate decision this week. Against the backdrop of earlier crude oil price surges reigniting inflationary pressures, voices within the FOMC supporting rate hikes this year have been increasing. Falconio said she expects the FOMC to formally drop its easing bias at this week's meeting, making the policy outlook more hawkish. But she still believes the Fed's next move will be an interest rate cut, and it will happen in 2027.

US asset management company PGIM holds a fringe view, believing the Fed will hike rates three times this year to curb overheating, and then reverse the hikes in 2027. The company had previously expected in April that the Fed would cut interest rates this year. PGIM stated that the US economy is "exceptionally strong" and inflation remains persistently high, requiring a new approach. Given this backdrop, and considering that the Fed has failed to achieve its 2% target for five consecutive years, PGIM expects the Fed to hike rates three times this year to bolster its credibility and anchor inflation expectations. PGIM said, "If the rate hikes are framed as 'precautionary' measures to address supply-side inflation and recent long-term Treasury yield fluctuations, then Wash will gain political support." However, PGIM said it expects the Fed "will reverse these hikes relatively quickly, with three rate cuts in 2027 and another in 2028, bringing the terminal rate to 3.375% — below the current rate and possibly close to the neutral rate." (Jin10 Data APP)

In other currencies:

The Bank of Japan raised its key rate by 25 basis points, lifting its target rate from 0.75% to 1.00%, the highest level in 31 years, in line with market expectations, after standing pat at its previous three meetings. The BOJ raised rates to the highest in 31 years on Tuesday, a long-awaited move signaling its commitment to tackling inflation risks from the Middle East conflict. At the end of the two-day meeting on Tuesday, the board voted 7-1 to raise the short-term policy rate from 0.75% to 1.0%. This marked the first rate hike since last December, bringing the BOJ's policy rate to a level not seen since 1995. BOJ Governor Ueda Kazuo was absent from the meeting and did not vote, as he was hospitalized for medical treatment. An afternoon press conference will be led by another BOJ deputy governor, Uchida Shinichi, and his remarks will be closely watched for how the BOJ will continue to assess the negative economic impact of the Iran war. (Jin10 Data APP)

On the data front:

Today will bring the US ADP employment change for the week ending May 30, US housing starts annualized for May, US building permits total for May, US import price index month-over-month for May, the Reserve Bank of Australia interest rate decision as of June 16, Germany’s June ZEW Economic Sentiment Index, the Eurozone’s June ZEW Economic Sentiment Index, and the Bank of Japan’s target rate as of June 16, among other data.

Also in focus: The State Council Information Office will hold a press conference on national economic performance. The China Academy of Information and Communications Technology (CAICT) will convene a seminar to launch the High-Quality Token Service Capability Climbing Plan. The Reserve Bank of Australia will announce its interest rate decision, and RBA Governor Bullock will hold a monetary policy press conference.

Crude oil:

As of 11:39, both benchmarks declined, with WTI down 0.09% and Brent down 0.26%.

As the Trump administration is about to complete its plan to release 172 million barrels from the Strategic Petroleum Reserve (SPR) to ease surging fuel prices triggered by the war with Iran, the US emergency crude stockpile has fallen to its lowest level since 1983. According to data released by the US Department of Energy on Monday, the SPR—established in the early 1970s after the Arab oil embargo—has dropped to about 340 million barrels, near a record low. If the plan is completed, it would be the second-largest release in the reserve’s history, leaving the reserve at about 243 million barrels, roughly one-third of its statutory capacity. The dwindling inventory reduces America’s flexibility to cope with future supply disruptions. A DOE spokesperson said the department is managing the reserve in line with its intended purpose: helping to stabilize oil markets, protect the US from supply disruptions, and make the country more energy secure. (Jin10 Data APP)

Morgan Stanley has sharply cut its oil price forecasts for the coming quarters, as a tentative agreement between the US and Iran to reopen the Strait of Hormuz is expected to revive regional production and boost supply. Analysts including Martijn Rats said in a June 15 report that Brent crude is expected to average $90 per barrel in Q3, compared with a previous forecast of $100, and $80 per barrel in the final three months of the year, down $15 from the prior estimate. They also noted that the expected timeline for a Middle East production recovery has been brought forward by one to two weeks. “Many issues remain to be negotiated and key risks persist, but this is an important step toward easing the conflict and increasing oil exports through the Strait of Hormuz,” they said. They added: "Production is expected to gradually recover from mid-July. We anticipate 50% of production will resume by September, 80% by December, and the remainder will be gradually restored in early 2027." (Jin10 Data)

Spot Market Overview:

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