Supply Contraction Expectations Persisted, MHP and High-Grade Nickel Matte Payable Indicators Fluctuated at Highs This Week

[SMM Morning Meeting Minutes: A Zinc Smelter in Peru Shut Down After a Fire; LME Zinc Logged Eight Consecutive Gains] Overnight, LME zinc opened at $3,558.5/mt. In early trading, LME zinc briefly moved lower to test a low below $3,542.5/mt, after which bears reduced open interest. LME zinc then rallied to a multi-year high, reaching above $3,633.5/mt. The center then pulled back slightly, and it finally closed higher at $3,587/mt, up $35/mt, a gain of 0.99%. Trading volume fell to 14,070 lots, and open interest decreased by 139 lots to 242,000 lots.

SMM May 15 News: Metals market: Overnight, domestic base metals fell nearly across the board. SHFE copper fell 0.35%. SHFE aluminum fell 0.7%, SHFE lead fell 0.54%. SHFE zinc rose 0.2%. SHFE tin fell 1.33%. SHFE nickel fell 1.06%. In addition, the most-traded alumina futures fell 0.32%, and the most-traded casting aluminum futures fell 0.7%. Overnight, ferrous metals mostly fell. Iron ore fell 0.12%, rebar rose 0.34%. Stainless steel fell 0.8%, hot-rolled coil rose 0.2%. Coking coal and coke: coking coal fell 0.72%, coke edged down slightly. Overnight overseas metals showed mixed performance. LME copper fell 0.7%. LME aluminum rose 0.21%, LME lead rose 0.4%. LME zinc rose 0.99%, hitting an intraday high of $3,633.5/mt, the highest since June 2022. LME tin fell 2.89%. LME nickel fell 1.17%. Overnight precious metals : COMEX gold fell 1.09%, COMEX silver fell 6%. Overnight, the most-traded SHFE gold futures fell 0.32%, and the most-traded SHFE silver futures fell 3.52%. As of 7:15 AM on May 15, overnight closing prices: Macro front China: [PBOC: Aggregate social financing in the first four months totaled 15.45 trillion yuan; new loans reached 8.59 trillion yuan; April M2 grew 8.6% YoY] PBOC data showed that, according to preliminary statistics, the cumulative increase in aggregate social financing in the first four months of 2026 was 15.45 trillion yuan, down 893 billion yuan YoY. Of this, RMB loans to the real economy increased by 8.5 trillion yuan (down 1.29 trillion yuan YoY); foreign currency loans to the real economy increased by 103.6 billion yuan in RMB equivalent (up 213.4 billion yuan YoY); entrusted loans decreased by 94.1 billion yuan (down an additional 99.4 billion yuan YoY); trust loans increased by 300 million yuan (down 45.1 billion yuan YoY); undiscounted bankers' acceptances increased by 51.3 billion yuan (down 199.2 billion yuan YoY); net corporate bond financing was 1.5 trillion yuan (up 739.3 billion yuan YoY); net government bond financing was 4.45 trillion yuan (down 399 billion yuan YoY); domestic equity financing by non-financial enterprises was 200.8 billion yuan (up 65.5 billion yuan YoY). In the first four months, RMB loans increased by 8.59 trillion yuan. At end-April, the outstanding balance of domestic and foreign currency loans was 284.29 trillion yuan, up 5.5% YoY. Month-end outstanding RMB loans stood at 280.5 trillion yuan, up 5.6% YoY. In the first four months, RMB loans increased by 8.59 trillion yuan. By sector, household loans decreased by 490.2 billion yuan, of which short-term loans decreased by 610.2 billion yuan and medium and long-term loans increased by 119.9 billion yuan; loans to enterprises and public institutions increased by 8.99 trillion yuan, of which short-term loans increased by 3.67 trillion yuan, medium and long-term loans increased by 5.01 trillion yuan, and bill financing increased by 142.9 billion yuan; loans to non-bank financial institutions decreased by 193.5 billion yuan. At end-April, the outstanding balance of foreign currency loans was $55.15 billion, up 3.4% YoY. In the first four months, foreign currency loans increased by $6.5 billion. PBOC data showed that at end-April, broad money (M2) balance was 353.04 trillion yuan, up 8.6% YoY. Narrow money (M1) balance was 114.58 trillion yuan, up 5% YoY. Currency in circulation (M0) balance was 14.75 trillion yuan, up 12.2% YoY. Net cash injection in the first four months was 653 billion yuan. [PBOC: To conduct 300 billion yuan outright reverse repo operation on May 15 with a 6-month tenor] To maintain ample liquidity in the banking system, on May 15, 2026, the People's Bank of China will conduct a 300 billion yuan outright reverse repo operation through fixed-quantity, interest rate tender, and multiple-price winning method, with a tenor of 6 months (184 days), maturing on November 15, 2026 (postponed in case of holidays). US dollar: Overnight, the US dollar index rose 0.41% to 98.88. According to Wallstreetcn, US April retail sales posted the strongest gain in 8 months, confirming consumer resilience, but inflationary pressures continued to build. Combined with rising long-term Treasury yields, market expectations for a US Fed interest rate cut have largely faded. US Fed Governor Barr stated that easing liquidity rules to shrink the central bank's balance sheet is a bad idea that could undermine the safety of the financial system. "There has been a lot of discussion recently about shrinking the size of the Fed's balance sheet to reduce our 'footprint' in the financial system," Barr said in prepared remarks for a conference hosted by the NYU Money Marketeers. "I believe shrinking the balance sheet is the wrong objective, and many of the proposals put forward to achieve it would weaken bank resilience, impede the normal functioning of money markets, and ultimately threaten financial stability," Barr said. "Some proposals would actually increase the Fed's 'footprint' in financial markets." Barr noted that allowing banks to reduce their liquidity holdings as a means of shrinking Fed assets could increase the risk that these institutions would need to turn to Fed liquidity facilities when in distress. He said, "The size of the Fed's balance sheet is not the right measure of its influence in financial markets," and in a system where the Fed creates reserves "at no cost," the real focus should be on the effectiveness of the Fed's monetary policy implementation. (Jin10 Data) According to Reuters, Milan formally submitted his resignation to the US Fed on Thursday local time, setting his departure date on or shortly before the day Waller is sworn in. Waller is expected to be sworn in as Fed Chairman within the coming days. In his resignation letter, Milan continued to warn that interest rates may be too high. He wrote that broader economic trends such as slowing population growth and deregulation would reduce inflation on their own, giving the Fed room to ease policy. He also argued that technical challenges in measuring inflation may cause inflation statistics to overstate actual levels. (Jin10 Data) According to CME "FedWatch": the probability of the US Fed holding rates unchanged through June is 96.8%, with a 3.2% probability of a cumulative 25 bps cut. The probability of holding rates unchanged through July is 93.8%, with a 3.1% probability of a cumulative 25 bps cut and a 3.1% probability of a cumulative 25 bps hike. Data: Today will see the release of the US May NY Fed Manufacturing Index, US April industrial production MoM, and China April total electricity consumption YoY, among other data. Also watch: 2026 FOMC voter and Cleveland Fed President Hammack delivers opening remarks at an online discussion on central bank independence; FOMC permanent voter and NY Fed President Williams participates in a discussion; US Fed Governor Barr speaks on the balance sheet; the National Energy Administration releases total electricity consumption data around the 15th of each month; Powell's term as Fed Chairman ends; US President Trump makes a state visit to China. Crude oil: Overnight, both oil futures rose, with WTI up 0.99% and Brent up 0.91%. Market concerns over supply disruptions amid the US-Iran conflict persisted, supporting oil prices. US Treasury Secretary Bessent stated that Iran's oil storage is full and Tehran will need to halt oil production. Following the US blockade on Iranian oil exports, the key question in this conflict is: how long can Iran store the oil it cannot export before running out of space. Some analysts believe Iran still has a few weeks of storage capacity, and Tehran has begun slowly cutting production to cope with the standoff. Bessent said in an interview on CNBC's "Squawk Box" that over the past three days, Iran has been unable to load tankers at its main oil export terminal, Kharg Island, as the US blockade prevented tankers from entering or leaving the Persian Gulf. In the first month of the US blockade, the US military forced 70 vessels allegedly heading to or from Iranian ports to change course. (Jin10 Data) According to Bloomberg ship-tracking data, four VLCCs loaded with crude oil have transited the Strait of Hormuz since May 10, with combined daily flows approaching 2 million barrels. However, this improvement was relatively limited. Freight analyst Georgios Sakellariou stated: according to Bloomberg ship-tracking data, four VLCCs loaded with crude oil have transited the Strait of Hormuz since May 10, with combined daily flows approaching 2 million barrels. However, this improvement was relatively limited. Goldman Sachs analyst Tallulah Adams noted that the oil market has entered a narrower trading range, with realized volatility over the past 5 days falling to the lowest level since the conflict began, and the market is largely in wait-and-see mode. Weak physical market signals suggest supply remains adequate for the May trading cycle, but Goldman Sachs also cautioned that the coming weeks will be critical as the summer peak demand season is about to arrive. (Wallstreetcn) Additionally, two industry sources told Reuters that a Gazprom natural gas processing plant in Russia's southern Astrakhan region suspended motor fuel production after a fire on May 13. The fire was caused by a drone strike. They said the plant suspended operations, including a stabilized condensate processing unit with an annual capacity of 3 million mt that produces gasoline and diesel. According to sources, restoring motor fuel production could take weeks to months. The second source said hydrogen sulfide treatment and sulfur recovery equipment were also damaged in the drone strike. Industry sources said the Astrakhan plant processed 1.8 million mt of stabilized natural gas condensate in 2024, producing 800,000 mt of gasoline, 600,000 mt of diesel, and 300,000 mt of fuel oil. (Jin10 Data)

Futures: Overnight, LME lead opened at $2,004/mt, moved sideways during the Asian session with a low of $2,001.5/mt; LME lead fluctuated upward after entering the European session, reaching a high of $2,017/mt, and finally closed at $2,012/mt, up 0.4%. Overnight, the most-traded SHFE lead 2606 contract opened at 16,590 yuan/mt, briefly touched a high of 16,620 yuan/mt at the beginning of the session before fluctuating downward, hitting a low of 16,530 yuan/mt near the close, and finally settled at 16,535 yuan/mt, down 0.33%. On the macro front: India restricted duty-free gold imports; Ukraine reported the largest Russian airstrike since the conflict began; Israel and Lebanon held a new round of negotiations in the US. OPEC+ reportedly plans to continue increasing production, targeting the restoration of all production cuts by the end of September. US Treasury Secretary Bessent: the oil price curve is expected to decline within six months; Iran has exhausted its oil storage capacity and will be forced to halt production. China's Ministry of Commerce: China is willing to work with the US to continuously expand the cooperation list. Ministry of Foreign Affairs: China is willing to work with the US to translate the new positioning of China-US relations into actions moving in the same direction. The PBOC: a 300 billion yuan outright reverse repo operation with a 6-month tenor will be conducted on May 15. : Driven by the LME lead rally, SHFE lead rebounded relatively, and suppliers actively made shipments while lowering quoted premiums. Additionally, primary lead smelter supplies were ample, with mainstream production areas quoted at parity with the SMM #1 lead average price on an ex-factory basis. Secondary lead side, losses remained prominent, and smelters held prices firm while shipping, with secondary refined lead quoted at parity with the SMM #1 lead average price on an ex-factory basis. Meanwhile, the lead-acid battery market remained in an off-season state, with limited just-in-time procurement from downstream enterprises. After lead prices rebounded, inquiry enthusiasm weakened, with buyers only maintaining just-in-time procurement, and spot market transactions turned sluggish. Inventory: On May 14, LME lead inventory decreased by 50 mt to 265,250 mt; SMM five-region lead ingot social inventory increased by approximately 6,100 mt WoW. Lead price forecast for today: Today is the delivery day. Suppliers continued to transfer lead ingots to delivery warehouses, and lead ingot social inventory continued to accumulate. Notably, the domestic market has recently underperformed the overseas market for lead prices. The lead ingot import window has entered a closed state this week. Meanwhile, the supply gap for high-grade lead ingots in Southeast Asia remained significant, with spot cargoes maintaining high premiums. In H2, the potential opening of the lead ingot export window and its impact on domestic lead price trends may be worth watching. Data source disclaimer: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.

[SMM Morning Meeting Minutes: Increasing Mine-Side Disruptions, LME Zinc Continues to Rally] Overnight, LME zinc opened at $3,482/mt. At the beginning of the session, LME zinc briefly dipped to a low of $3,457/mt. Subsequently, bulls increased their open interest, and LME zinc fluctuated upward throughout the session, touching a high of $3,542.5/mt near the close. It ultimately closed higher at $3,532.5/mt, up $50.5/mt, a gain of 1.45%. Trading volume increased to 15,265 lots, and open interest rose by 727 lots to 242,000 lots.

Futures: Overnight, LME lead opened at $1,987/mt and fluctuated downward to a low of $1,972.5/mt during the Asian session. Driven by concerns over ore supply disruptions due to energy shortages in Peru, LME lead rallied firmly during the European session, touching a high of $1,998/mt near the close and ultimately settling at $1,997.5/mt, up 0.45%. Overnight, the most-traded SHFE lead 2606 contract opened at 16,595 yuan/mt, briefly touched a high of 16,605 yuan/mt at the start, then fluctuated downward to a low of 16,520 yuan/mt before moving sideways near the close, ultimately settling at 16,525 yuan/mt, down 0.33%, marking a fifth consecutive decline. On the macro front: A US appeals court stayed an unfavorable ruling on Trump's 10% global tariffs. India raised the basic customs duty on gold and silver imports from 5% to 10%. Indian banks proactively paid customs duties to resume gold and silver imports, completing customs clearance of 9 mt of gold and 34 mt of silver in May. Russia cut its 2026 crude oil production forecast by 14.2 million mt to 511 million mt, and its export forecast by 4.5 million mt to 237.2 million mt. The US overall CPI annual rate for April was 3.8%, exceeding the expected 3.7% and hitting the highest level since May 2023, with the energy index contributing over 40% of the overall increase. : As the SHFE lead price center shifted further downward, suppliers sold along with the market, with some lowering discounts for shipments. However, affected by the crackdown on "invoice-based tax arbitrage," some trading companies had their invoicing quotas reduced, restricting lead market trading. Primary lead from smelters in the form of cargoes self-picked up from production site was increasingly directed toward downstream enterprises. Additionally, as secondary lead losses widened, smelters showed strong hold back from selling sentiment, with notably fewer spot order quotations. Mainstream production areas quoted secondary refined lead at premiums of +0~+50 yuan/mt over SMM #1 lead on an ex-factory basis. Downstream enterprises maintained just-in-time procurement, with inquiry enthusiasm rising compared to the previous day. However, given the weak lead price trend, apart from some downstream enterprises that purchased as needed, most preferred to wait and see. Inventory: On May 12, LME lead inventory decreased by 375 mt to 265,550 mt. As of May 11, SMM five-region lead ingot social inventory increased by approximately 2,200 mt WoW. Lead price forecast for today: The SHFE lead 2605 contract will enter delivery this week. Suppliers continued to transfer lead ingots to delivery warehouses, and lead ingot social inventory maintained its upward trend, surpassing the 70,000 mt mark again for the first time in nearly two months. Recently, the lead-acid battery market remained in off-season mode, and primary lead supply was stable to rising. In particular, following the sharp rally in SHFE lead last week, downstream enterprises were reluctant to purchase at high prices, and the spread between futures and spot prices widened to above 200 yuan/mt. Suppliers' willingness to ship to delivery warehouse increased. Lead ingot social inventory is expected to continue rising before delivery is completed, with notable resistance for lead prices. Data Source Statement: All data other than publicly available information is SMM processed data based on publicly available information, market communication, and SMM's internal database model, for reference only and does not constitute decision-making advice.