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, domestic base metals mostly fell. SHFE copper dropped 0.14%. SHFE aluminum rose 0.66%. SHFE lead edged up. SHFE zinc fell 0.28%. SHFE tin dropped 0.43%. SHFE nickel edged down.

In addition, the most-traded casting aluminum futures rose 0.68%, and the most-traded alumina futures fell 0.69%. The most-traded lithium carbonate futures fell 3.74%. The most-traded silicon metal futures 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 dropped 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 dropped 0.25%. LME zinc fell 0.1%. LME tin dropped 1.14%. LME nickel fell 0.27%.

Precious metals, as of 11:41, COMEX gold fell 0.13%, and COMEX silver dropped 0.74%. Domestic precious metals: the most-traded SHFE gold futures rose 0.17%, and the most-traded SHFE silver futures 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, #0 zinc mainstream transaction prices were concentrated at 24,495-24,675 yuan/mt, Shuangyan mainstream transactions at 24,605-24,775 yuan/mt, and #1 zinc mainstream transactions at 24,425-24,605 yuan/mt. In the morning session, the market quoted a premium of 30-40 yuan/mt against the SMM average price, with no quotes against the futures contract for now...

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 Chairs 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' Optoelectronic Industry Cluster High-Quality Development Action Plan (Draft for Public Comments)" was released for public consultation. It was mentioned that by 2030, the provincial optoelectronic industry cluster would achieve revenue exceeding 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 would be on developing high-performance optical coherent 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 technology; accelerating R&D and industrialisation of key products and technologies including ≥200G EML, ≥800mW large power lasers, and ≥800G high-speed optical modules. Support would be given to advantageous enterprises to expand into specialty segments such as submarine optical cables and high-performance optical cables, continuously improving and enhancing 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, and 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 the interest rate cuts demanded by Trump difficult to implement. 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 constant, compounded by a global pandemic and the fight against high inflation. Warsh will take over leadership from Powell. (Jin10 Data)

The sharp rise in US Treasury yields this month may be nearing its peak. Analysts at JPMorgan stated: "We no longer believe 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 expects the US Fed to keep rates unchanged, but the probability of a rate hike is also increasing. Long-term bonds appear undervalued. JPMorgan stated: "We believe this bearish repricing presents an opportunity to increase duration." (Jin10 Data)

A CICC research report noted that multiple recent US inflation data points exceeded expectations, while the labor market trended toward stability. Bonds experienced a sell-off, and market concerns over inflation continued to intensify. Meanwhile, US-Iran peace negotiations showed no substantive progress, the Strait of Hormuz remained effectively closed, and upside risks to energy prices were difficult to dissipate. In our base case scenario, we expect US PCE inflation to remain above 3.5% for the full year, with core PCE inflation staying 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 a more cautious direction, making further interest rate cuts unlikely within the year (previously, the next rate cut was expected in Q4). After new Chair Warsh takes office, establishing policy credibility will be the top priority, and promptly conveying clear anti-inflation signals to the market is both a necessary duty and an essential move to stabilize expectations. For markets, this means a rising probability of marginal tightening in US dollar liquidity, and assets driven purely by liquidity are likely to remain under pressure.

Other currencies:

The Reserve Bank of Australia stated in its latest meeting minutes that raising interest rates for the third consecutive meeting would provide it with room to monitor how households and enterprises cope with the impact of the Middle East conflict that has caused fuel prices to surge. The minutes noted: "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 enterprises respond." The committee acknowledged that policy actions cannot change the "short-term trajectory" of inflation. Money markets expect the RBA to raise rates at least once more this year, with more than a 50% probability of two additional hikes. After raising rates again two weeks ago, the RBA has fully reversed all of last year's easing measures. (Jin10 Data)

Data:

Data to be released today include the US 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, and the Canada April CPI MoM.

Crude oil:

As of 11:41, oil prices in both markets declined, with WTI down 1.56% and Brent down 2.02%. The US extended the Russian seaborne oil sanctions waiver by another 30 days; at the request of Gulf allies, Trump canceled the military strike on Iran originally scheduled for the 19th, and international oil prices dropped sharply in response. (Jin10 Data)

On May 18 local time, IEA Executive Director Fatih Birol, while attending the G7 finance ministers' meeting in Paris, France, stated that due to the Middle East conflict, commercial oil inventories are "declining sharply" and can sustain supply for "only a few more weeks."Birol said that the IEA's decision in March to coordinate the release of strategic petroleum reserves by member states could increase daily market supply by approximately 2.5 million barrels, but these reserves "are not inexhaustible," and all parties should recognize the urgency of the situation. The latest monthly oil report released by the IEA on the 13th of this month showed that in March and April, global observable petroleum inventories, including offshore crude oil, decreased by 250 million barrels, equivalent to a daily average decrease 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 Sanae will visit South Korea from Tuesday to Wednesday as part of ongoing "shuttle diplomacy" between the two countries. The situation in the Middle East is expected to be one of the key topics of the talks. The joint reserve plan will utilize the "Partnership on Energy and Resource Resilience" (POWERR), an energy framework for cooperation with Southeast Asia announced by Takaichi Sanae in April. POWERR Asia aims to support the development of energy supply systems, particularly in Asian countries with insufficient petroleum reserves. Financial support will be provided through institutions such as the Japan Bank for International Cooperation 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 petroleum reserve systems. (Jin10 Data)

Spot market overview:

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