Crude Oil Rises While Base Metals Generally Fall, with SHFE Tin Down Nearly 6%, SHFE Copper Down Over 1%, SHFE Silver Down More Than 8% [SMM Midday Review]

SMM June 8 News:

Metal Markets:

As of the midday close, base metals on the domestic market mostly declined. SHFE copper fell 1.5%, SHFE aluminum and SHFE zinc both dropped 0.74%, SHFE lead edged down 0.21%, and SHFE tin slumped 5.97%. SHFE nickel rose 0.79%.

In addition, the most-traded cast aluminum contract futures fell 0.39%, while the most-traded alumina contract rose 0.8%. The most-traded lithium carbonate contract edged up 0.38%. The most-traded silicon metal contract rose 1.27%. The most-traded polysilicon futures contract gained 0.1%.

Ferrous metals mostly rose, with iron ore down 0.92%, rebar edging up, and HRC on par with 3,378 yuan/mt. Stainless steel increased by 0.44%. For coking coal and coke: the most-traded coking coal contract rose 1.21%, while the most-traded coke contract edged down 0.02%.

Overseas Market Base Metals: As of 11:46, LME metals showed mixed performance. LME copper rose 0.34%, LME aluminum fell 0.11%, and LME lead lost 0.15%. LME zinc declined 0.18%, LME tin edged up, and LME nickel gained 0.38%.

Precious Metals: As of 11:46, COMEX gold fell 0.78%, and COMEX silver dropped 2.23%. Domestic precious metals: the most-traded SHFE gold contract declined 3.55%, and the most-traded SHFE silver contract slumped 8.46%.

Additionally, as of the midday close, the most-traded platinum futures contract fell 5.43%, and the most-traded palladium futures contract dropped 4.24%.

As of the midday close, the most-traded containerized freight index (Europe) futures contract rose 4.78% to 3,837 points.

As of 11:46 on June 8, some futures midday quotes:

Spot and Fundamentals

Copper: Today, Guangdong #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at 60 yuan/mt, up 10 yuan/mt from the previous trading day; standard-quality copper was quoted at a discount of 10 yuan/mt, up 10 yuan/mt from the previous trading day; SX-EW copper was quoted at a discount of 60 yuan/mt, up 10 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 103,945 yuan/mt, down 1,390 yuan/mt from the previous trading day, while the average price for SX-EW copper was 103,860 yuan/mt, down 1,390 yuan/mt from the previous trading day...

Macro Front

Domestic:

[Ministry of Housing and Urban-Rural Development: Fully Leverage Market Mechanisms to Encourage Private Enterprise Participation in Urban Infrastructure Construction and Operation] Qin Haixiang, Vice Minister of Housing and Urban-Rural Development, stated at a State Council policy routine briefing that localities should make good use of central fiscal funds, local government special bonds, and credit funds. They should fully leverage market mechanisms, actively attract social capital participation, and encourage private enterprises to take part in urban infrastructure construction and operation, so as to build a sustainable investment and financing system for urban construction and operation.

[Ministry of Natural Resources: Adhere to the Supply Orientation of Prioritizing Existing Land, Operating Projects to Prioritize the Use of Existing Land] Xie Haixia, Director of the Territorial Spatial Planning Bureau of the Ministry of Natural Resources, stated at a regular policy briefing of the State Council that innovative land use support policies will be introduced. The ministry will adhere to the supply orientation of prioritizing existing land, with operating projects prioritizing the use of existing land, while newly added land will primarily ensure the needs of municipal infrastructure. In response to strong pressure to revitalize existing funds reported by operating entities, the Ministry of Natural Resources has launched a transitional period policy.

[PBOC Open Market Operations Achieve a Net Injection of 207.5 Billion Yuan for the Day] The PBOC conducted 218.5 billion yuan in 7-day reverse repo operations today. With 11 billion yuan in 7-day reverse repos maturing today, the operation resulted in a net injection of 207.5 billion yuan for the day.

On the US dollar front:

As of 11:46, the US dollar index fell 0.03% to 100.04. US President Trump stated that it would be a mistake if Fed policymakers chose to raise interest rates after US jobs data significantly beat expectations. He also insisted he does not want to influence Kevin Warsh ahead of his first Fed meeting. In an interview with NBC, Trump said, "Nowadays, whenever economic data comes in well, the market falls because people think the Fed will raise interest rates. But there’s no reason to raise rates at all." Trump's remarks further increased the economic and political pressure facing Warsh. Trump said, "Raising the benchmark rate is the wrong thing to do. Actually, we should be cutting rates." Trump stated, "I’m working with Kevin now. I have great respect for him, but my view is that when a country is doing well economically, you shouldn’t immediately punish it by raising rates." He added, "We have a debt problem and many other things to deal with, and many plans to move forward. I want to further expand defense spending." (Jin10 Data APP)

According to the CME "FedWatch" tool: The probability of the Fed keeping rates unchanged through June is 97%, while the probability of a cumulative 25-basis-point rate cut is 3%. The probability of the Fed keeping rates unchanged through July is 81.9%, the probability of a cumulative 25-basis-point rate hike is 15.5%, and the probability of a cumulative 25-basis-point rate cut is 2.5%.

Goldman Sachs economists said they no longer expect the Fed to cut interest rates this year, as the labour market was stronger than expected. The bank postponed the expected timing of the Fed's final two rate cuts from December 2026 and March 2027 to June and December 2027. However, Goldman Sachs' chief US economist Merrick pointed out that as inflation "seems unlikely to become self-sustaining," the likelihood of US Fed interest rate hikes remains relatively low. US job growth in May surpassed all expectations, demonstrating the resilience of the labour market and intensifying market bets that the central bank will raise interest rates. Goldman Sachs continues to view the likelihood of rate hikes as low, but raised the probability of a small rate hike from 10% to 20%. The bank’s baseline forecast still expects two 25-basis-point interest rate cuts next year, but lowered the probability from 40% to 30%. Goldman Sachs also lowered its forecast for the US unemployment rate this year to 4.4% from the previous 4.6%.

On the data front:

today will see the release of Switzerland's May consumer confidence index, the Eurozone's June Sentix investor confidence index, and the US May New York Fed 1-year inflation expectations, among others. In addition, attention should be paid to: the State Council's regular policy briefing on the "15th Five-Year Plan for Urban Renewal."

On the crude oil front:

as of 11:46 AM, both benchmark crudes rose, with US crude up 3.25% and Brent crude up 3.44%. The ongoing Middle East conflict continues to stoke supply disruption concerns, supporting oil prices.

According to the communiqué released after OPEC's Sunday meeting, seven countries within the OPEC+ framework (Russia, Saudi Arabia, Iraq, Kazakhstan, Kuwait, Algeria, and Oman) decided to raise their daily crude oil production ceiling by 188,000 barrels starting in July. The communiqué stated that the countries reaffirmed the importance of a cautious approach and will retain full flexibility to increase, pause, or reverse the process of voluntary production adjustments. (Jin10 Data APP)

Saudi Arabia cut the official selling price of its main crude oil for Asia for the second consecutive month, though its crude premium in its largest market remains near multi-decade highs. Saudi Aramco lowered the official selling price of its Arab Light crude for next month’s shipments to Asia by $6 per barrel, bringing the premium over the Oman/Dubai average to $9.50 per barrel. The cut was larger than the $5 per barrel reduction expected by refiners and traders. As negotiations between the US and Iran over an extended ceasefire remain deadlocked, the global oil market continues to be disrupted by the ongoing closure of the Strait of Hormuz. With tankers trapped inside the Persian Gulf and empty vessels unable to enter to load new cargoes, the Middle East has significantly reduced production, shut down fields, and slowed or halted refinery operations. Additionally, the pricing documents show that Saudi Arabia set the official selling price of Arab Light crude to Northwest Europe for July at a premium of $15.85 per barrel over ICE Brent settlement, and set the official selling price to the US at a premium of $12.60 per barrel over Argus Sour Crude. (Jin10 Data APP)

Spot Market Overview:

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