Crude Oil Continues to Decline, Metals Show Mixed Performance, LME Aluminum Falls Over 4%, LME Tin Rises Over 2%, COMEX Gold and Silver Gain for Third Straight Day [Overnight Market]

SMM June 16 News:

Metals Market:

Overnight, base metals on the domestic and overseas markets showed mixed performance. LME tin led the gains with a 2.54% increase, while SHFE tin rose 1.52%. SHFE aluminum fell 1.8%, and LME aluminum dropped 4.52%, with the rest of the metals posting % changes within 1%. Alumina main contract fell 1.5%, and cast aluminum main contract declined 1.41%.

Overnight, ferrous metals generally fell. Iron ore rose 0.39%, hot-rolled coil edged up 0.18%, and stainless steel gained 1.72%, while declines for the remaining metals were relatively small. For coking coal and coke, coking coal fell 0.7% and coke dipped 0.36%.

Overnight in precious metals, COMEX gold rose 2.18% and COMEX silver jumped 3.07%. Domestically, SHFE gold gained 1.77% and SHFE silver climbed 2.49%.

Overnight closing prices as of 6:44 AM on June 16:

Macro Front

Domestically:

[NDRC and other departments: Launch a three-year action plan targeting energy conservation and carbon reduction upgrades in key sectors] The National Development and Reform Commission (NDRC) and other departments decided to organize and implement a three-year action plan targeting energy conservation and carbon reduction upgrades in key sectors including steel, aluminum, cement, flat glass, oil refining, ethylene, synthetic ammonia, methanol, and coal-fired power. It was mentioned that these key industries account for large-scale, high-intensity energy consumption and carbon dioxide emissions, making them the top priority for improving energy efficiency, reducing coal consumption, and lowering carbon emissions. Starting in 2026, the plan will focus on nine sectors—steel, aluminum, cement, flat glass, oil refining, ethylene, synthetic ammonia, methanol, and coal-fired power—to fully implement energy conservation and carbon reduction upgrades over three years, driving enterprises to elevate their energy and carbon efficiency levels as much as possible and significantly improve the industry's green, low-carbon development. Starting in 2028, the implementation scope is to be further expanded based on actual conditions, with additional sectors advanced progressively, and various regions can proceed in an orderly manner ahead of schedule in line with work needs.

[PBOC's reverse repo delivers a net injection of 206.5 billion yuan today] The People's Bank of China conducted 425 billion yuan in seven-day reverse repo operations at an interest rate of 1.40%, unchanged from the previous day. Today, 218.5 billion yuan in reverse repo matured.

US Dollar:

Overnight, the US dollar index edged down 0.11% to 99.68. US asset manager PGIM holds a fringe view that the Fed will raise interest rates three times this year to cool an overheating economy, before reversing the hikes in 2027. The firm had forecast rate cuts this year as recently as April. PGIM stated the US economy is "exceptionally strong," and persistently sticky inflation requires a new approach. Given this backdrop, and with the Fed having missed its 2% target for five consecutive years, PGIM expects three rate hikes this year to bolster its credibility and anchor inflation expectations. "The rate hikes would be politically palatable for Warsh if they are characterized as 'preventive' measures to address supply-side inflation and the recent gyrations in long-term Treasuries," PGIM said. However, the firm noted it expects the Fed "to reverse these hikes relatively quickly, with three rate cuts in 2027 and one further cut in 2028, taking the terminal rate to 3.375%—below the current rate and likely close to the neutral rate." (Jin10 Data APP)

Leslie Falconio, Head of Taxable Fixed Income Strategy at UBS Global Wealth Management, said the oil price pullback following the US-Iran agreement announcement saw the Treasury market strengthen, easing pressure on the Fed to hike rates this year. "Even before the ceasefire deal, as oil prices were coming down, the two-year yield was still rising because markets were pricing in a near-100% probability of a December hike," Falconio said. "Now what's happening is oil prices are falling and markets are unwinding those rate-hike expectations. As a result, the two-year yield is starting to decline." New Fed Chairman Warsh will preside over his first interest rate decision this week. After the recent surge in crude oil prices reignited inflationary pressures, voices within the FOMC supporting rate hikes this year have been growing. Falconio said she expects the FOMC to formally drop its easing bias at this week's meeting, making the policy outlook more hawkish. However, she still believes the Fed's next move will be a cut, occurring in 2027. (Jin10 Data APP)

According to CME's "FedWatch": The probability of the Fed holding rates steady in June is 98.5%, with a 1.5% chance of cumulative 25bp of cuts. For July, the probability of holding rates unchanged is 91.3%, the probability of a cumulative 25bp hike is 7.4%, and the probability of cumulative 25bp of cuts is 1.4%. (Jin10 Data APP)

Data Front:

Data to be released today include China's May total retail sales YoY, China's May value-added of industrial output above designated size YoY, the US weekly change in ADP employment for the week ending May 30, US May annualized housing starts, US May building permits, US May import price index MoM, the Reserve Bank of Australia's 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.

Additionally, the National Bureau of Statistics (NBS) will release the monthly report on residential selling prices in 70 large and medium-sized cities, and the State Council Information Office will hold a press conference on the national economic performance. The China Academy of Information and Communications Technology 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. Bank of Japan Deputy Governor Shinichi Uchida will hold a monetary policy press conference, and the BOJ will announce its interest rate decision.

Crude Oil:

Overnight, both oil benchmarks fell, with WTI crude down 4.38% and Brent crude down 4.55%. The US and Iran simultaneously announced a ceasefire memorandum of understanding was reached, with Trump authorizing a "free and open" Strait of Hormuz and lifting the naval blockade. The formal signing ceremony is scheduled for June 19 in Switzerland.

As the Trump administration nears completion of its plan to release 172 million barrels from the Strategic Petroleum Reserve (SPR) to ease the surge in fuel prices triggered by the Iran war, the US emergency crude oil supply has fallen to its lowest level since 1983. According to data released by the US Department of Energy (DOE) on June 15, the US SPR, established after the Arab oil embargo in the early 1970s, has dropped to a near-historic low of approximately 340 million barrels. (From Wallstreetcn APP)

According to local news from Iran on the 16th, three oil tankers and two ships carrying essential Iranian goods have breached the US-imposed naval blockade. Separate reports indicated that multiple Iranian vessels successfully transited the blocked area. According to vessel-tracking data, an Iranian Very Large Crude Carrier was heading from international waters toward an Iranian port and had passed the blockade zone. A ship carrying livestock feed had also crossed the blockade and was en route to Iran. Additionally, another Iranian oil tanker fully loaded with crude has passed through the Gulf of Oman and the blockade line, heading to its export destination. (CCTV News) (Jin10 Data APP)