US Dollar Fell, Base Metals Rose Collectively, LME Tin Up Nearly 5%, Gold and Silver Rebounded Slightly, SHFE Silver Up Over 2% [Overnight Market]

SMM May 21 News:

Metals market:

Overnight, base metals collectively rose in both domestic and overseas markets. LME tin lead the gains with a surge of 4.92%, SHFE tin rose 3.93%. LME copper, LME aluminum, LME zinc, LME nickel, SHFE copper, SHFE lead, and SHFE zinc all rose over 1% — LME copper up 1.69%, LME aluminum up 1.17%, LME zinc up 1.61%, LME nickel up 1.09%, SHFE copper up 1.43%, SHFE lead up 1.06%, SHFE zinc up 1.35%. The remaining metals gained less than 1%. The alumina front-month contract rose 0.07%, and the casting aluminum front-month contract rose 0.24%.

Overnight, ferrous metals showed mixed performance. Stainless steel rose 0.51%, iron ore fell 0.56%, and rebar fell 0.09%. Hot-rolled coil and rebar both edged up. For coking coal and coke, coking coal rose 0.12% and coke rose 0.11%.

Overnight, for precious metals, COMEX gold rose 0.78% and COMEX silver rose 1.39%. In China, SHFE gold rose 0.88% and SHFE silver rose 2.7%.

Overnight closing prices as of 6:42 AM on May 21:

Macro Front

China:

[Ministry of Finance: Securities transaction stamp tax reached 93.5 billion yuan in January-April, up 74.8% YoY]In January-April, national general public budget revenue totaled 8,340.4 billion yuan, up 3.5% YoY. Of this, national tax revenue was 6,809.7 billion yuan, up 3.9% YoY; non-tax revenue was 1,530.7 billion yuan, up 1.6% YoY. By central and local breakdown, central general public budget revenue was 3,547.4 billion yuan, up 4.6% YoY; local general public budget revenue was 4,793 billion yuan, up 2.7% YoY. Stamp tax was 206.3 billion yuan, up 27.8% YoY. Of this, securities transaction stamp tax was 93.5 billion yuan, up 74.8% YoY.

[MOFCOM: The Chinese government implements export controls on rare earths and other critical minerals in accordance with laws and regulations, and reviews compliant, civilian-use license applications]The head of the Department of American and Oceanian Affairs of MOFCOM provided interpretation on preliminary trade and economic outcomes. MOFCOM stated that the Chinese and US trade teams had thorough communication on export control issues, and both sides will jointly study and resolve each other's reasonable and legitimate concerns. The Chinese government implements export controls on rare earths and other critical minerals in accordance with laws and regulations, and reviews compliant, civilian-use license applications. China is willing to work with the US, together with DAS solar, to create favorable conditions for promoting mutually beneficial cooperation between enterprises of both countries and safeguarding the security and stability of global industry chain and supply chains.

US dollar:

As of the overnight close, the US dollar index fell 0.18% to 99.13. The US Fed meeting minutes showed that regarding the monetary policy outlook, participants generally believed that persistently elevated inflation levels and uncertainty about the duration and economic impact of Middle East conflicts could require the current policy stance to be maintained for longer than expected. Several participants emphasized that it might be appropriate to lower the target range for the federal funds rate once clear signs emerged that the pullback trend in inflation had steadily resumed, or if signs of greater weakness in the labour market appeared. However, most participants noted that if inflation remained persistently above 2%, some tightening measures might be needed. To address this situation, many participants indicated that they would prefer to remove language from the post-meeting statement that implied the Committee's future rate decisions might lean toward easing. Participants noted that monetary policy was not set in stone and that future policy decisions would be determined based on the specific circumstances at each meeting. (Jin10 Data APP)

The US Fed meeting minutes showed that regarding monetary policy expectations, the US Fed's head of market operations noted that market-implied expectations still indicated that market participants did not anticipate much change in the federal funds rate target range this year, with options prices implying approximately a 30% probability of a rate hike by Q1 2027. In the Open Market Trading Desk survey, the median of the modal path continued to show two 25-basis-point interest rate cuts over the next year, but respondents now expected the cuts to come later than in the previous survey, with cuts anticipated in Q3 or Q4 2026 and Q1 2027, respectively. (Jin10 Data APP)

Market analysts noted that the US Fed's April meeting minutes showed that as the Iran conflict pushed inflation higher, an increasing number of officials raised hawkish concerns. At the prior meeting in March, "some" participants had indicated that the US Fed had ample reason to provide balanced policy guidance—that the next move could be either a rate hike or a rate cut—contrary to the prevailing assumption that rates would eventually be cut. In April, this group expanded to include "many" officials who preferred more neutral language in the policy statement. The April minutes also noted that, overall, officials generally believed that rates would need to remain on hold for longer than they had initially anticipated. (Jin10 Data APP)

According to the CME "FedWatch" tool: the probability of the US Fed holding rates unchanged through June was 97.3%, with a 2.7% cumulative probability of a 25-basis-point interest rate cut. The probability of the US Fed holding rates unchanged through July was 87.2%, with a 2.4% cumulative probability of a 25-basis-point interest rate cut and a 10.4% cumulative probability of a 25-basis-point rate hike. (Jin10 Data APP)

On the data front:

Data to be released today include China's April SWIFT yuan share in global payments, US initial jobless claims for the week ending May 16, US April annualized housing starts, US April building permits, US May Philadelphia Fed Manufacturing Index, US May S&P Global Manufacturing PMI (preliminary), US May S&P Global Services PMI (preliminary), Eurozone May Manufacturing PMI (preliminary), Eurozone March seasonally adjusted current account, Eurozone May Consumer Confidence Index (preliminary), France May Manufacturing PMI (preliminary), Germany May Manufacturing PMI (preliminary), UK May Manufacturing PMI (preliminary), UK May Services PMI (preliminary), UK May CBI Industrial Orders Balance, and Australia's April seasonally adjusted unemployment rate.

In addition, at 2:00 on May 21, the US Fed will release the minutes of its monetary policy meeting, NVIDIA will report earnings and hold an earnings call after the US stock market close, Bank of England Governor Bailey will deliver a speech, and China will open a new round of refined oil price adjustment window.

Crude Oil:

As of the overnight close, oil prices on both markets fell in tandem, with WTI crude dropping 4.87% and Brent crude falling 5.5%, as tensions between the US and Iran temporarily eased. Crude oil futures extended their losses as the market shifted its focus to hopes for an agreement to end the US-Iran conflict and reopen the Strait of Hormuz. BOK Financial analyst Dennis Kissler stated that despite the bullish news of a significant decline in US crude oil inventory last week, which should have supported oil prices, prices continued to slide. "That tells me that most likely some kind of negotiation is going on." "The market is pricing in some kind of a deal." (Jin10 Data APP)

The US Energy Information Administration (EIA): US EIA crude oil inventory fell by 7.8 million barrels last week, compared with Bloomberg user expectations of a 6 million-barrel decline, analyst expectations of a 2.8153 million-barrel decrease, and a 4.306 million-barrel decline the previous week. The weekly EIA Strategic Petroleum Reserve (SPR) inventory recorded its largest decline in history. The single-week crude oil inventory decline including SPR was the largest on record. (Wallstreetcn)