Commodity Market Update
Metal Market
China’s base metals traded broadly higher at the midday close. SHFE Copper rose 1.76%, Aluminum 0.58%, Lead 0.41%, Zinc 0.99%, Tin 0.85%, and Nickel 1.00%.
The most-traded cast aluminum futures contract gained 0.69%, while alumina rose 0.33%. Lithium carbonate fell 1.18%, silicon metal was flat at 8,665 yuan/mt, and polysilicon futures increased 0.94%.
Most ferrous metals gained. Iron ore declined 0.77% and rebar fell 0.10%, while hot-rolled coil rose 0.46% and stainless steel gained 0.42%. Coking coal increased 0.66% and coke rose 0.58%.
LME Base Metals: As of 11:42, LME Copper was up 1.36%, Aluminum 0.68%, Lead 0.42%, Zinc 0.58%, Tin 0.43%, and Nickel 0.62%.
Precious Metals: COMEX Gold rose 0.28% and Silver 1.02%. SHFE Gold gained 0.89%, while the most-traded SHFE Silver contract rose 1.92%. Platinum futures advanced 2.64% and Palladium increased 2.05%.
The most-traded European shipping container futures contract jumped 8.59% to 1,725.5 points.
Silver: Easing expectations for further rate hikes supported silver prices, while liquidity-risk concerns capped the upside. Prices consolidated near recent highs, with cautious sentiment in the spot market and transactions mainly at low premiums.
Macro Market
China:
The PBOC conducted no 7-day reverse repo operation on August 17, while it conducted an overnight reverse repo operation worth 565.5 billion yuan.
China has made significant progress in key technologies for detecting impurities in high-purity rare earth products. The new technology is expected to improve the accuracy, speed, and efficiency of rare earth quality control.
US Dollar & Fed:
As of 11:42, the US Dollar Index fell 0.09% to 99.55. According to CME FedWatch, the probability of the Fed keeping rates unchanged through September stands at 66.9%, while the probability of a cumulative 25-bp rate hike is 33.1%.
Chicago Fed President Goolsbee said recent inflation data were encouraging but stressed that several months of continued improvement would be needed to gain confidence that inflation is sustainably returning toward the 2% target. He supported keeping rates unchanged in July.
Goldman Sachs Chief Economist Jan Hatzius said a September Fed rate hike has become very unlikely, unless August economic data show a significant deterioration or reversal.
Key Data:
Markets will watch China’s July retail sales and industrial production data, Canada’s July CPI, the US August New York Fed Manufacturing Index, and the NAHB Housing Market Index. China’s 70-city residential property price data and other economic updates are also due.
Crude Oil
As of 11:42, WTI was up 0.22% and Brent gained 0.46%. Oil prices edged higher amid renewed geopolitical concerns, including Israeli attacks on Lebanon and the possibility of new US sanctions on Iran.
According to Kpler data, vessel traffic through the Strait of Hormuz dropped sharply over the weekend amid attacks on oil tankers and stalled US-Iran talks. Five bulk commodity vessels passed through the strait on Saturday, while none passed on Sunday, compared with 31 vessels the previous weekend.
Overall Outlook:
The broad-based strength in base metals, softer dollar, and reduced expectations of near-term Fed rate hikes are providing support to metals. However, geopolitical risks, liquidity concerns, and upcoming economic data could keep volatility elevated.