SMM June 22 news: Metals market: As of the midday close, base metals on the domestic market mostly fell, with only SHFE aluminum rising, up 0.4%. SHFE tin led the decline with a drop of 1.31%, SHFE nickel fell 0.84%, SHFE lead and SHFE zinc both fell 0.7%, and SHFE copper edged down 0.34%. The most-traded alumina contract fell 0.52%, while the most-traded casting aluminum contract rose 0.47%. In addition, the most-traded lithium carbonate contract fell 6.08%, the most-traded polysilicon contract fell 0.25%, and the most-traded silicon metal contract fell 0.58%. The most-traded European route container shipping index futures rose 0.11%. In the ferrous metals segment, all except stainless steel rose. Stainless steel rose 0.36%, while hot-rolled coil and iron ore both fell around 0.6%. In the coking coal and coke segment, coking coal fell 2.24% and coke fell 1.78%. On the overseas market front, as of 11:38, base metals on the LME all rose, with LME nickel leading the gains at 1.23%, LME tin up 0.88%, LME copper up 0.53%, and the other metals showing relatively small fluctuations. In precious metals, as of 11:38, COMEX gold fell 1.15%, COMEX silver fell 0.73%. Domestically, SHFE gold fell 3.25% and SHFE silver fell 5.65%. In addition, the most-traded platinum contract fell 4.77% and the most-traded palladium contract fell 3.51%. As of 11:38 on June 22, selected futures midday quotes: Spot and fundamentals Zinc: Today, mainstream transaction prices for #0 zinc were concentrated in the range of 24,495-24,790 yuan/mt, Shuangyan brand mainstream transaction prices were at 24,595-24,890 yuan/mt, and #1 zinc mainstream transaction prices were at 24,425-24,720 yuan/mt. In the morning session, quotations against the SMM average price were at premiums of 10-30 yuan/mt, while no quotes were offered against the futures market. In the second trading session, quotations for ordinary domestic brands against the 2607 contract were at discounts of 40-20 yuan/mt..... Macro front Domestic aspect: [Unchanged for the 13th consecutive month! China's latest LPR quotes released: 3.5% for the over-five-year term and 3% for the one-year term.] China’s June Loan Prime Rate (LPR) was released on June 22, with both the one-year and over-five-year LPRs unchanged. The People's Bank of China authorized the National Interbank Funding Center to announce that the LPRs on June 22, 2026 were: the one-year LPR at 3.0%, and the over-five-year LPR at 3.5%. These LPRs will remain valid until the next LPR release. [During the three-day Dragon Boat Festival holiday, cross-regional person trips nationwide are expected to exceed 650 million.] According to the Ministry of Transport, during the three-day Dragon Boat Festival holiday (June 19-21, 2026), the total cross-regional person trips nationwide were expected to be 652.78 million, with a daily average of 217.593 million, flat YoY. (（CCTV News） On the dollar front: As of 11:38 AM, the US dollar index rose 0.11% to 100.88, with markets continuing to monitor developments following the US-Iran talks. US federal funds rate futures extended their decline, indicating a 76% probability of a Fed rate hike in September. On June 19, Citadel Securities released a research note stating that under new Fed Chair Warsh, the Fed has shifted from inertial decision-making to proactive, adaptive policymaking. Citadel Securities warned that the market should not interpret this signal with inertial thinking. Its core assessment: the next move is a rate hike, and that hike is likely imminent. At the same time, the note stressed that the Fed will no longer continue its previous market-coddling approach of "pre-communicating policy paths". This shift holds significant implications for the interest rate market, the US dollar, and the stock market. Citadel Securities set its baseline scenario as three 25-basis-point rate hikes over the next two years, in September 2026, December 2026, and March 2027, and views the July meeting as a "live meeting", meaning action could be taken at any time. The Fed projects that core PCE inflation will average about 90 basis points above the 2% target over 2026-2027. Based on the inflation gap and classic monetary policy rules, Citadel Securities calculates that the policy rate should exceed the neutral rate by 1.5 times the inflation gap, implying an additional 135 basis points of tightening. Assuming a neutral rate of 3%, the target policy rate should fall in the 4.25%–4.50% range, corresponding to exactly three rate hikes. (Wall Street Insights) According to the CME FedWatch Tool: The probability that the Fed holds rates steady in July is 61.5%, and the probability of a cumulative 25-basis-point hike is 38.5%. For September, the probability of rates remaining unchanged is 24.9%, the probability of a cumulative 25-basis-point hike is 52.2%, and the probability of a cumulative 50-basis-point hike is 22.9%. (Jin10 Data) On the data front: Today will see the release of Canada's May CPI month-over-month rate, the Eurozone's preliminary June consumer confidence index, and other data. Furthermore, the State Council Information Office will hold a press conference on policies and measures to stabilize, improve, and optimize the utilization of foreign investment. ECB President Lagarde speaks at the European Parliament, and Fed Governor Waller delivers welcome remarks at a conference on the international role of the US dollar. Crude Oil: As of 11:38, both oil benchmarks fell together, with US crude down 0.11% and Brent crude down 1.24%. Crude oil prices experienced sharp rises and falls today. Earlier, Trump issued threats again during the negotiations, driving oil prices sharply higher. Subsequently, progress in the US-Iran peace negotiations dragged oil prices down. Qatar and Pakistan issued a joint statement on social media platform X, saying that the first round of high-level US-Iran talks concluded in Burgenstock, Switzerland. The parties agreed to establish a high-level committee. Chief negotiators will report regularly to the high-level committee and lead working groups responsible for nuclear issues, sanctions, and monitoring and dispute resolution. The high-level committee agreed on a roadmap aiming to reach a final agreement within 60 days. To avoid accidents and miscommunication and ensure the safe passage of merchant ships through the Strait of Hormuz, communication channels have been established. It was also agreed to set up a de-escalation group to ensure the implementation of the commitment to cease military operations within Lebanese territory. For the rest of the week, technical talks will continue in Burgenstock, discussing all related issues. (From Wallstreetcn APP) Ali Nizar, head of Iraq’s State Oil Marketing Organization (SOMO): Currently, two vessels are loading crude oil at the country’s southern terminal, but more vessels need to enter the Strait of Hormuz for production to continue rising. (Iraq 24 TV) (From Wallstreetcn APP) Iran is shipping large volumes of oil that were previously unable to be exported due to US sanctions, potentially giving it a boost after signing a temporary peace deal with Washington last Wednesday. Shipping data showed that a total of 11 tankers were spotted leaving Iran’s Chabahar port in the Gulf of Oman last week, carrying a combined 20 million barrels of crude oil. (Bloomberg) Spot Market Overview: ► ► ► ► ► ► ► ► ► ►

SMM June 22: Metals markets: On Friday night, the domestic base metals market was closed for the Dragon Boat Festival holiday. Looking back at the performance of domestic base metals on June 18, we see: Domestic base metals showed mixed performance, with SHFE zinc up 0.39%, SHFE aluminum up 0.38%, and SHFE nickel edging up. SHFE tin fell 2.03%, SHFE copper fell 0.48%, and SHFE lead fell 0.15%. On Friday night, the ferrous metals market was closed for the Dragon Boat Festival holiday. Looking back at ferrous metals on June 18: Stainless steel rose 0.07%, iron ore fell 1.13%, rebar fell 0.95%. Hot-rolled coil fell 0.77%. The most-traded coking coal futures contract fell 5.78%, and the most-traded coke contract fell 3%. On Friday night in the overseas metals market, LME base metals mostly fell. LME copper fell 0.5%. LME aluminum rose 0.12%, LME lead fell 1.32%. LME zinc fell 2.05%. LME tin rose 0.19%. LME nickel fell 1.41%. On Friday night in precious metals : COMEX gold fell 1.72%, posting a third consecutive weekly decline, with a weekly drop of 1.55%; COMEX silver fell 2.12%, marking its sixth consecutive weekly decline, with a weekly drop of 4.51%. On Friday night, the most-traded SHFE gold contract was closed; SHFE gold posted a weekly gain, up 4.11% for the week. The most-traded SHFE silver contract was closed; SHFE silver posted a weekly gain, up 5.25% for the week. As it no longer expects the US Fed to cut interest rates in 2026, Goldman Sachs lowered its year-end gold price forecast by $500. Analysts Lina Thomas and Daan Struyven wrote in a note: "We revised down our December gold price target to $4,900/oz (previous target $5,400), implying gold is still expected to rise in H2, though by less than previously expected. Our view on gold remains structurally constructive but tactically cautious, with near-term downside risks and medium-term upside risks." The analysts said the downgrade was driven by Goldman Sachs economists pushing back the first US rate cut to June and December next year, from prior expectations of December 2026 and March 2027, and also by a lower forecast for gold ETF inflows. Additionally, they added that concerns over central bank independence may be limited given the "unexpectedly hawkish" first Fed meeting under Chair Warsh. (Jinshi) As of 7:47 a.m. June 20, closing prices from Friday night: Macro front China side: [NFRA: Promote the construction of AI application infrastructure in the financial industry] The National Financial Regulatory Administration (NFRA) issued guidance on the development and application of safe AI in the banking and insurance sectors. It proposes to promote the construction of an AI application ecosystem in the financial sector. Advance the development of AI application infrastructure in the financial industry and promote the sharing and reuse of AI application outcomes across the sector. Encourage large financial institutions to play an exemplary role and export AI technologies and management experience to small and medium-sized financial institutions. Support small and medium-sized financial institutions in strengthening collaboration to jointly drive the implementation of application scenarios. Encourage closer synergy with the AI industry, using financial applications to foster industrial innovation and development, and leveraging industrial achievements to improve the quality and efficiency of financial applications. [Box office on the first day of the 2026 Dragon Boat Festival holiday surpasses 100 million yuan, number of new releases hits a near-decade high for the same period] According to data from online platforms, as of now, the box office (including pre-sales) on the first day of the 2026 Dragon Boat Festival holiday has exceeded 100 million yuan. The film offerings during the 2026 Dragon Boat Festival are diverse and rich in genre. Over the short three-day holiday, nearly 20 films were released in concentrated fashion, setting a new high for the same period in nearly a decade. The film genres cover sci-fi, youth, animation, and more, addressing the viewing needs of audiences across almost all age groups. (CCTV News) [Guangdong: Accelerate the construction of the national integrated computing power network hub in the Guangdong-Hong Kong-Macao Greater Bay Area and make forward-looking plans for 6G technology and satellite internet] The General Office of the People's Government of Guangdong Province issued a notice on the Implementation Plan for Promoting the Expansion and Quality Improvement of the Service Sector in Guangdong Province. It mentions that the deployment of 5G-A networks and pilot projects for 10G optical networks will be advanced in an orderly manner. 50G-PON ports will be deployed on a large scale in key scenarios such as factories and industrial parks. The upgrading and renovation of aging communication facilities will be further promoted, with FTTR whole-home optical network coverage to be achieved simultaneously in both new and older residential communities. Mobile network coverage along major transportation routes and hubs will be improved, and initiatives to increase broadband speeds and benefit the public will be implemented, driving an overall leap in broadband user download rates. The construction of the national integrated computing power network hub in the Guangdong-Hong Kong-Macao Greater Bay Area will be accelerated, the spatial layout of data centers optimized, edge computing vigorously developed, and a “cloud-edge-device” collaborative computing power service system created. Forward-looking plans will be made for 6G technology and satellite internet, a Guangdong 6G Industry Innovation and Development Alliance will be established, and ministerial-provincial 6G collaborative pilot projects will be promoted, with a focus on creating application benchmarks for distinctive scenarios such as embodied AI, intelligent connected vehicles, the low-altitude economy, and the marine economy. [Guangdong: Support the Guangzhou Futures Exchange in enriching its futures product system and improving the full futures industry chain] The General Office of the People's Government of Guangdong Province issued a notice on the Implementation Plan for Promoting the Expansion and Quality Improvement of the Service Sector in Guangdong Province. It mentions that efforts will be made to cultivate and strengthen high-quality investment banks and investment institutions, encourage leading securities firms and fund management companies to enhance their service capabilities, compliance management capabilities, and market leadership, attract well-known domestic and international asset management institutions to establish corporate headquarters or regional headquarters in Guangdong, and encourage the development of the investment advisory business. Leverage the comprehensive service functions of the capital market, guide and support cities in improving the reserve pools of IPO-ready enterprises and M&A and restructuring projects, collaborate with exchanges, brokerages and other institutions to thoroughly deliver full-cycle counseling services for pre-IPO enterprises, optimize approval processes for land use rights, property, stock transfers involved in M&A and restructuring of publicly listed firms, and encourage enterprises to expand the issuance scale of sci-tech bonds, green bonds, and asset securitization products. (From Wallstreetcn APP) [Weifang: Expand the implementation of 2026 consumer goods trade-in category subsidy activities] The Weifang Municipal Bureau of Commerce issued an announcement on expanding the implementation of Weifang's 2026 consumer goods trade-in category subsidy activities. According to the province-wide unified categories and standards, subsidies will be provided to individual consumers purchasing range hoods, household gas stoves (including integrated stoves), water purifiers, dishwashers, hearing aids, robot vacuums (including floor scrubbers), walking-assist exoskeleton robots, smart toilets, and other products. Individual consumers purchasing the above subsidized category products within Weifang will receive a subsidy of 15% of the final selling price after deducting discounts at all stages. Each person is limited to one subsidized item per category, with a maximum subsidy of 1,500 yuan per item, and the delivery place of the subsidized products must be within the administrative area of Weifang. (Published by Weifang) [Shanghai International Energy Exchange Issues Notice on Launch of Market Orders and Order Quantities for Related Trading Instructions] According to the Shanghai International Energy Exchange, market orders will be launched starting July 6, 2026 (i.e., the continuous trading session on the evening of July 3, 2026). Market orders are applicable to all listed futures and options products. For limit orders, the minimum order quantity per order is 1 lot, and the maximum order quantity per order is 500 lots for futures products and 100 lots for options products. For market orders, the minimum order quantity per order is 1 lot, and the maximum order quantity per order is 60 lots for futures products and 30 lots for options products. For settlement price trading orders, the minimum order quantity per order is 1 lot, and the maximum order quantity per order is 500 lots. Dollar aspects: Overnight last Friday, the US dollar index fell 0.06% to 100.76, hitting a high of 101.13 and a low of 100.69 during the session. On the weekly chart: the US dollar index rose for the week, up 0.97% for the week. Market pricing showed that bets on Fed rate hikes increased, with a 25-basis-point rate hike in September fully priced in. Data showed that foreign exchange traders, including hedge funds, were buying large amounts of options, betting that the dollar would strengthen further after the Fed sends a hawkish signal this week and reinforces US rate hike expectations. According to traders, leveraged funds started buying dollar call options on Wednesday, which would increase in value if the dollar appreciates. That demand extended into Thursday as investors digested the new Fed Chairman Warsh's anti-inflation remarks. Bank of America’s head of Americas FX options, Tobias Jungmann, said: “We’re seeing massive dollar call buying, concentrated mainly in G-10 currencies. Given how low implied volatility is currently, building long dollar positions via options looks very attractive.” James Swindell, senior FX options trader at Barclays in London, said: “We’re seeing broad-based, notable demand for dollar calls, especially in EUR/USD and GBP/USD.” (Jin10 Data APP) According to CME’s “FedWatch”: The probability that the Fed keeps rates unchanged in July is 60.4%, while the probability of a cumulative 25-basis-point hike stands at 39.6%. By the September meeting, the probability of unchanged rates is 31.2%, with a 49.6% chance of a cumulative 25bp hike and a 19.1% chance of a cumulative 50bp hike. (Jin10 Data APP) On other currencies: ECB Chief Economist Philip Lane said on Thursday that eurozone inflation will remain elevated despite the recent pullback in energy prices. The ECB raised rates last week for the first time in nearly three years, responding to the surge in energy prices since the Middle East conflict erupted in late February. However, oil and natural gas prices subsequently tumbled after Iran and the US announced a peace deal. Lane said the ECB has no doubts about the correctness of the rate-hike decision and still expects inflation to stay above the 2% target for a prolonged period. “We think food prices will rise, and prices of goods and services will rise too. Even in a milder scenario where oil prices pull back, the rate hike was justified,” he said. Separately, ECB Governing Council member Wunsch said: If we see rising services inflation, we could consider another 25bp rate hike as insurance. If the data are ambiguous, I see no need to rush into action. (Jin10 Data) [Bank of England keeps rates on hold in a 7-2 vote, says it will watch Middle East situation closely] The BoE kept the interest rate at 3.75%, calling the recent drop in oil prices “encouraging,” though two policymakers voted for an immediate 25bp hike, worried about persistent inflation. External member Megan Greene joined Chief Economist Huw Pill—April’s sole dissenter—in voting to lift rates to 4% immediately, arguing that the price outlook remains uncertain despite the recent US-Iran ceasefire deal. (From Wall Street CN APP) On the macro front: This week will see the release of China’s one-year loan prime rate as of June 22, Canada’s May CPI month-on-month rate, the eurozone’s June flash consumer confidence index, France’s June flash manufacturing PMI, Germany’s June flash manufacturing PMI, the eurozone’s June flash manufacturing PMI, the UK’s June flash manufacturing PMI, the UK’s June flash services PMI, the UK’s June CBI industrial orders balance, the US ADP employment change for the week ending June 6, the US June S&P Global flash manufacturing PMI, the US June S&P Global flash services PMI, the US June Richmond Fed manufacturing index, Australia’s May unadjusted CPI year-on-year rate, Germany’s June IFO business climate index, Switzerland’s June ZEW investor sentiment index, the US Q1 current account, US May new home sales annualized, Australia’s May seasonally adjusted unemployment rate, Germany’s July GfK consumer confidence index, US initial jobless claims for the week ending June 20, the US May core PCE price index year-on-year rate, the US May personal spending month-on-month rate, the final Q1 US real GDP annualized quarter-on-quarter rate, the preliminary Q1 US real personal consumption expenditures quarter-on-quarter rate, the final Q1 US real personal consumption expenditures quarter-on-quarter rate, the final Q1 US core PCE price index annualized quarter-on-quarter rate, the US May core PCE price index month-on-month rate, the US May durable goods orders month-on-month rate, the US June University of Michigan consumer sentiment final index, and the US June one-year inflation expectations final rate. Additionally, this week, attention should also be paid to: European Central Bank President Lagarde Christine speaks at the EU Parliament; Bank of Canada Governor Macklem Tiff delivers remarks; the 17th Summer Davos Forum takes place in Dalian from June 23 to 25; the Bank of Japan releases the summary of opinions from its June monetary policy meeting; Nvidia holds its annual general meeting of shareholders; the Bank of Canada publishes its monetary policy meeting minutes; the US Fed releases the results of its annual bank stress test; Bank of Japan Governor Ueda Kazuo attends a central bank lecture event hosted by the International Monetary Fund (IMF); 300 billion yuan of 1-year medium-term lending facility (MLF) and 248 billion yuan of 7-day reverse repos mature today; FOMC permanent voting member and New York Fed President Williams John speaks; 2027 FOMC voting member and Chicago Fed President Goolsbee Austan speaks; 2026 FOMC voting member and Minneapolis Fed President Kashkari Neel speaks. Crude Oil: Both crude oil futures rose in overnight trading last Friday: WTI rose 0.91%, Brent rose 0.47%. Weekly: WTI futures fell for two consecutive weeks, down 9.83% for the week; Brent fell for two straight weeks, down 8.53%. International crude oil futures opened lower on Friday, then struggled to rebound and turned lower several times during the session, hitting a low for the day after reports of a ceasefire between Israel and Hezbollah. As news emerged that both sides continued to attack each other after the ceasefire, prices turned higher again in late European trading. Brent struggled around the $80 level throughout the day. (Wall Street View) Iran's Foreign Ministry stated: Negotiations on a permanent deal with the US will only begin after the war in Lebanon ends permanently, the US fully lifts blockades, the US grants waivers for Iranian oil, and Iran's frozen assets are released. (Jin10 Data APP) Iran is shipping out a large volume of oil that was previously unable to be exported due to the US blockade, which could be welcome news for Tehran after it signed a temporary peace agreement with Washington on Wednesday. Shipping data compiled by Bloomberg showed that 11 tankers sailed from Iran's Chabahar port in the Gulf of Oman this week, carrying a total of 20 million barrels of crude oil. Previously, the US military had blocked these tankers from entering the Indian Ocean, a move aimed at limiting Tehran's access to petrodollars. (Jin10 Data APP) In addition, Intercontinental Exchange (ICE) data showed that for the week ended June 16, speculative net long positions in Brent crude oil futures decreased by 94,763 contracts to 114,128 contracts. (Jin10 Data APP) Additionally, due to the contract rollover, the floor trading of NYMEX New York crude oil July futures will close at 2:30 on June 23, and electronic trading will close at 5:00 a.m. Please pay attention to the exchange's expiration and rollover notices to manage risks. Moreover, the expiration of U.S. oil contracts on some trading platforms is usually one day earlier than the official NYMEX date, so please stay alert.

[SMM Insights] China's Steel Export Landscape to Middle East Reshaped: Finished Products Stall while Billets Stand Out Looking back at 2025, the Middle East market was undoubtedly the most dazzling "emerging dynamic market" in China's overseas steel landscape. In 2025, China's total steel exports to the Middle East reached 15.81 million mt, with monthly shipments basically stable in the high range of 1.2–1.3 million mt. Against the backdrop of total annual steel exports of 134 million mt, up 14% YoY, the Middle East market accounted for 11%–12% of China's total overseas steel export share. This means that in a single geo-economic region, its share and strategic reliance were second only to Southeast Asia, serving as the "second largest core pillar" for China's steel going global. In terms of product mix, high-added-value HRC (29% share), steel pipes essential for oil and gas projects (18% share), and medium-thickness plates (14% share) formed the three dominant players, reflecting the region's strong diversified industrial and infrastructure throughput capacity. However, it was precisely due to such a massive trade base in 2025 and high reliance on conventional Persian Gulf shipping lanes that when geopolitical storms suddenly struck and straits were dramatically blocked, the resulting "broad market stall" and supply chain disruption were so severe. Below, we will analyze in order: the specific situation of China's steel exports to the Middle East, how cargo pressure was shifted through port replacements during the strait blockade, and how the export landscape will be reshaped after the latest US-Israel negotiations? The "Stall" and Structural Anomaly of China's Steel Exports to the Middle East Data Source: SMM, China's General Administration of Customs First, let's look at total export performance. According to SMM historical data and the latest customs export trends, China's total steel exports to the Middle East in the first four months of 2026 plummeted from 5.47 million mt in the same period of 2025 to 3.57 million mt, with April exports directly halving. Specifically, among China's 5.47 million mt of steel exports to the Middle East from January to April 2025, a highly advanced finished-product-oriented export characteristic was evident. HRC (29%), steel pipe (18%), coated steel (15%), and medium-thickness plates (14%) constituted the four mainstays of China’s steel trade. In terms of destination countries, Saudi Arabia’s rigid demand for offshore/oil & gas pipe (986,000 mt) and the UAE’s strong processing throughput of general HRC (1.607 million mt) and medium-thickness plates (779,000 mt) jointly established the traditional “dual-core consumption hinterland” within the Persian Gulf. Data source: SMM, General Administration of Customs of China Supply Shock and Physical Scissors Gap: The “Billet Export Bonanza” Under a Double Squeeze Since the start of 2026, the blockade of the Persian Gulf Strait caused by geopolitical conflicts significantly weakened overall shipments, while a dramatic “underlying mutation” simultaneously unfolded in the product mix. Steel billet, a minor product that previously accounted for only an 8% share (431,000 mt), registered a strong countertrend increase of 24% in the first four months of 2026. According to the SMM survey, the underlying driver of this anomaly originated from a localized supply shock induced by geopolitical shifts in Iran. If the closure of the Persian Gulf Strait severed the “aorta” of Middle Eastern steel imports, the sudden destruction of Iran’s two largest steel giants—Mobarakeh Steel Company (MSC) in Isfahan and Khuzestan Steel Company (KSC)—on March 27, 2026, completely ignited a “raw material upheaval” within the region. Iran is the world’s tenth-largest and the Middle East’s largest crude steel producer (accounting for over 50% of the region’s total crude steel output), with annual steel exports exceeding 10 million mt, among which semi-finished steel billets are the absolute mainstay. Mobarakeh (MSC) has an annual capacity of 11.8 million mt (20% of Iran’s total capacity), making it the undisputed “King of Flat Products/Sheets & Plates” in the Middle East; Khuzestan (KSC) is Iran’s second-largest steel producer and its most critical production base for slabs and billets. Data source: SMM, General Administration of Customs of China Under normal conditions, Iran was the primary supplier of low-priced steel billets to local rolling mills in the Middle East. With the sharp contraction in Iran's external supply, rolling mills in the Middle East, particularly in Oman and parts of the UAE outside the Gulf that were not directly affected by the blockade, faced severe raw material supply disruption risks. To maintain production, local buyers quickly released a large number of urgent inquiries to the international market. According to SMM survey, the huge demand gap for steel billets created by Iran's exit was filled and shared by supplies from China, India, and Russia. Because the local shortage was mainly crude steel raw material for rolling sheets and plates, and the equipment destruction from explosions meant that rolling lines were the first to restart, the main incremental product in these counter-trend orders was steel slab. This situation shares similarities with the article at https://mp.weixin.qq.com/s/bsrZaRRSRDHC_FmGLulJOQ (Middle East turmoil triggers "mismatch", China accelerates filling a supply vacuum of about 2.3 million mt in Southeast Asia), which mentioned that China would accelerate taking over steel billet supply gaps. That is, despite the decline in steel exports this year, billet exports also achieved counter-trend growth. Stock Game: The "X-Shaped Crossover" of Inside-Gulf Shutdowns and Outside-Gulf Safe Havens Verified by SMM through freight forwarders, steel trade (especially medium-thickness plates, pipes, and steel billets) relies heavily on bulk or breakbulk vessels. When container liners encounter blockades, they can easily reroute by amending bookings via computer systems, but the diversion of bulk carriers faces rigid constraints from destination port drafts, specialized handling equipment (such as large quay cranes), and inland truck connections. Therefore, over the past two months, the supply chain staged a dramatic "port drift" inside and outside the Persian Gulf. The following uses SMM's panoramic shipping data to explain in detail the changes in cargo flow between ports. Under normal conditions, over 70% of China's steel shipments to the Middle East converged densely on Jebel Ali Port inside the Persian Gulf and Dammam Port on the eastern coast of Saudi Arabia. But after the strait blockade, steel port arrivals at these two traditional hubs showed a historic "physical shock" in SMM's high-frequency shipping data (falling to zero from April to May). Meanwhile, the diverted cargo, fighting to survive, surged wildly toward alternative ports outside the strait, tearing open a "lifeline of safety" spatially: ① "Overload Surge" at Oman's Port of Sohar: As the most critical cross-border multimodal transshipment hub outside the Gulf, its port arrivals in April surged nearly fivefold MoM. Large batches of Chinese HRC and steel billet originally destined for the inner Gulf were forced ashore here, causing massive congestion at the port in May as cross-border heavy truck capacity collapsed. ② "Western Route Counterflow" at Saudi Arabia's Jeddah Port: Saudi Arabia abandoned its eastern sea route (Dammam Port) nationwide, forcibly redirecting all Chinese orders to Jeddah on the Red Sea side, causing its throughput to surge to a peak of 361,000 mt in April. Source: SMM, Google Maps However, it should be noted that while cargo can be transferred via other ports in the short term, port arrivals in May have already shown a weakening trend again. The reason is that alternative ports outside the Gulf simply cannot handle such massive and concentrated cargo volumes, leading to extremely severe congestion. According to SMM's survey, because navigation within the Gulf is no longer possible, some shipping lines originally bound for Jebel Ali had to divert to Fujairah, but are still queuing for berths. Jeddah Port faces similar issues. With tight capacity, prices keep surging, and transportation faces severe obstacles. Source: SMM Outlook for Change: With the US-Iran blockade-lifting deal, what impact will the shipping supply chain face? After 108 days of the "dual blockade" (Iran's blockade of the strait and the US's counter-blockade of Iranian ports) that gripped the lifeline of global energy and commodities, the US and Iran officially issued successive high-profile statements announcing a ceasefire memorandum of understanding. The relevant timeline is summarized below. Data source: Compiled by SMM from public channels The news, once released, triggered a strong market reaction. On one hand, there are expectations for export increments from shipping recovery; on the other hand, there are certain demand expectations for post-disaster reconstruction. According to the latest SMM survey, most exporters have not responded enthusiastically to the lifting of the blockade and remain skeptical about its actual implementation. Therefore, from the perspective of actual order-taking, shipments to the Middle East still need 3 to 4 weeks to be verified. If a full lifting is confirmed, the "demand backlog" caused by the earlier shipping disruptions will see a concentrated release. Based on past customs data and the local supply-demand balance table, SMM roughly predicts that finished steel products will experience strong growth expectations, potentially filling a disaster-induced gap of approximately 1.7-2.1 million mt. Among them, HRC accounts for the highest proportion (29%) of China's finished steel exports to the Middle East. Although the Middle East's largest flat steel giant, Iran's Mobarakeh Steel Company (MSC), has reported production resumptions for its blast furnace previously damaged by war, its capacity is in a post-disaster repair phase and is not expected to fill the local gap in the short term. However, recent market rumors suggest that Indian resources are seizing the Middle Eastern market at lower prices, which will also pose some impact on China's export order-taking. However, for semi-finished products, the reason Chinese steel billets have been "hot" in recent months is the supply gap caused by the strait blockade and the bombing of Iranian steel mills. Once Iran's logistics fully recover, Chinese steel billets will lose their advantage in absolute price, logistics distance, and surrounding multilateral competition, and the demand gap in Southeast Asia previously filled by substituting Iranian sources may also be reclaimed. Recently, according to SMM surveys, billet resources are already circulating in the Middle Eastern market. Through the following comparison of comprehensive landed costs (CFR) for billets in the Middle East, it can be clearly seen that Chinese resources are under comprehensive pressure: Source: SMM Therefore, steel billet exports to the Middle East are expected to be somewhat limited, with competition only possible at lower prices. Preliminary forecasts indicate a pressure reduction of 50,000–250,000 mt. However, we need to broaden our perspective to the global multilateral trade context, and we must not fall into excessive pessimism due to localized marginal reductions. Although the billets exported to the Middle East are under pressure, the incremental steel billet volumes that previously replaced Iranian exports to Southeast Asia may not necessarily be wiped out. Given the uncertainty of the Middle East situation and based on considerations of a more stable supply chain, Southeast Asian buyers may continue to source from Chinese suppliers. Therefore, against the backdrop of an overall steel recovery and resilience in steel billet prices, SMM maintains its earlier view, holding a moderately optimistic stance on annual steel exports, with expectations of "steady incremental growth." Finally, it needs to be added that, currently, due to severe port congestion, even if the strait is confirmed passable, it will still take a long time for actual cargo to arrive and cannot immediately be reflected in the data. At the same time, ocean freight rates will also maintain high-level fluctuations in the short term due to unfavorable port cargo pick-up. 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The most-traded iron ore contract held steady with an upward bias today, with the most-traded contract I2609 closing at 771.5 yuan/mt, up 0.72% from the previous trading session. Port spot prices rose 3–5 yuan/mt from the day before. Traders showed fairly strong offering interest, but steel mills’ wait-and-see sentiment deepened and purchase willingness remained weak. Market trading sentiment was sluggish, and spot trading volume has been low so far today. The U.S.–Iran memorandum of understanding has been reached and is expected to be formally signed on the 19th, with the conflict likely to come to an end, which is positive for the global economy and lent some strength to iron ore prices. From a fundamental perspective, however, last week’s SMM shipping data showed that, driven by quarter-end target pushing, shipments from both Australia and Brazil rose, while shipments from non-mainstream countries such as South Africa and India also increased, meaning that incremental supply-side additions continue to cap upside room for iron ore. Moreover, with the seventh round of coke price cuts taking effect today, steel mill losses worsened in some regions. Combined with soft demand during the off-season, some steelmakers may bring forward blast furnace maintenance, and expectations of weaker iron ore demand are emerging. On balance, iron ore faces considerable resistance to the upside and is likely to move sideways in a narrow range in the near term.

DCE iron ore futures trended weaker today, with the most-traded contract I2609 closing at 759 yuan/mt, down 0.78% from the previous trading day. Port spot prices fell 5 yuan/mt from the day before. Traders followed the market trend with moderate offering interest; steel mills mainly engaged in need-based restocking, with limited inquiry. Trading volume of spot cargoes was modest as of now. Shipping data shows China's iron ore supply has entered a loose phase, with ore prices gradually coming under pressure. SMM data indicates that last week, global iron ore shipment volume dropped 3.88% WoW to 33.83 million mt, while iron ore arrivals at Chinese ports rose 2% WoW to 27.54 million mt. Meanwhile, the decline in port pick-up volume also reflects that demand from steel mills has begun to slow. With expectations of rising coking coal and coke prices still in place, even if hot metal prices remain elevated, steel mills' receptiveness to iron ore prices is quite constrained, making ore prices overall more likely to fall than rise. In the near term, iron ore prices will likely remain under pressure, exhibiting a generally weak trend.

According to the latest SMM steel shipping data, China's total steel export volume from 32 ports in May was 11.46 million mt, down 3.43% MoM. Among main ports, port departures for steel in May were Zhanjiang (450,900 mt, up 66.63% MoM), Fangchenggang (171,100 mt, up 40.13% MoM), Zhangjiagang (670,700 mt, up 45.52% MoM), Luojing Port (1.2224 million mt, up 30.15% MoM), Tianjin Xingang Port (2.6011 million mt, down 14.76% MoM), and Caofeidian (337,400 mt, down 33.23% MoM). Data source statement: Except for public information, all other data are processed by SMM based on public information, market communication, and SMM's internal database model. They are for reference only and do not constitute any investment advice.