On Tuesday, Eastern Time, Chicago Fed President Goolsbee warned that the energy shock stemming from the Middle East conflict is threatening the US Fed’s dual mandate, complicating its monetary policy outlook and potentially delaying interest rate cuts—echoing earlier remarks by Fed Governor Barr that inflation risks and oil prices support keeping rates unchanged for longer. Specifically, the energy price shock poses risks to both sides of the US Fed’s dual mandate, making the trade-off between controlling inflation and supporting economic growth more complex. “The new shock has undoubtedly disrupted the US Fed’s plans... and inflation was already uncomfortably high even before the shock occurred,” Goolsbee said bluntly. Goolsbee noted that central bank policymakers around the world lack clear historical experience to draw on in dealing with the current mix of geopolitical risks and inflationary pressures, and therefore “this is a bad situation for central banks.” Goolsbee stressed that the current path of interest rates at central banks around the world still depends heavily on how the conflict evolves, especially its impact on energy markets. As for the US Fed, he said he is not yet able to judge whether it will be able to cut interest rates again, because that outlook depends on the duration of the conflict and the extent to which rising oil prices affect overall inflation. “Only if inflation shows improvement can one realistically expect rates to fall this year,” he added, further reinforcing the US Fed’s data-dependent stance. The US Fed’s Internal Stance Is Turning More Cautious These remarks by Goolsbee were highly consistent with earlier comments by Fed Governor Michael Barr. Barr had previously also emphasized that, given that US inflation remains above target and elevated oil prices are further pushing up inflation, interest rates may need to remain unchanged “for some time.” In addition, Barr likewise pointed out that although the US labour market appears to be stabilizing, US Fed officials need to see clear evidence of sustained disinflation before considering interest rate cuts. Taken together, these comments highlight the US Fed’s increasingly cautious shift in stance. As geopolitical developments exert a growing influence on the US inflation outlook, the combination of persistent price pressures and external shocks has reinforced expectations that high inflation will last longer, while also creating uncertainty over the feasibility of further policy easing in the near term. For markets, the key point is that after the Russia-Ukraine shock several years ago, energy-driven inflation risks have now been firmly incorporated into the US Fed’s reaction function. As a result, US Fed rate expectations may remain sensitive not only to economic data, but also to developments in the Middle East conflict and their impact on oil prices.

The latest US inflation data has been released, showing that seasonally adjusted CPI in February rose 0.3% MoM and was up 2.4% YoY; core CPI increased 0.2% MoM and rose 2.5% YoY, with all figures in line with market expectations. However, the prevailing market view is that the February data has not yet reflected the impact of the sharp rise in oil prices caused by the situation in Iran. Therefore, further data is still needed to support judgment on when the US Fed will cut interest rates again.

Silver price (XAG/USD) claws back a majority of its early losses and recovers to near its opening price around $84.00 during the European trading session on Monday.

US Fed Governor Milan noted that he was not inclined to overinterpret a single month’s employment report. He mentioned that an oil price shock might bring downward pressure to core inflation by suppressing demand. He also believed that the neutral rate was roughly in the 2.5%–2.75% range, and that the US Fed should cut interest rates to the neutral level and then reassess the situation. In addition, he stated clearly that if the US Fed did not decide on an interest rate cut this month, he would vote against it.

Next week, key macroeconomic data releases include China’s February CPI y/y, the US February non-seasonally adjusted CPI y/y, the US January core PCE price index y/y, and the preliminary US March one-year inflation expectations; meanwhile, geopolitical tensions in the Middle East persist, with unchanged impacts on maritime shipping and energy supply, while a surge in oil prices has hit interest rate cut expectations, and US Treasury traders have increasingly expected that the US Fed will not cut interest rates this year. In addition, on March 6, SHFE officially announced the passage of the revision plan for lead futures contracts, with secondary lead substitutes at a discount of 150 yuan/mt to deliverable-grade material. LME lead, overseas geopolitical issues have mixed bullish and bearish impacts on the lead market: on the one hand, hindered transportation and rising energy prices such as natural gas have pushed up smelting cost, and lead-acid battery exports have also been constrained by transportation restrictions; on the other hand, there is the impact of damage to the economic environment. In addition, overseas lead inventory has remained elevated after surging by more than 50,000 mt during the Chinese New Year period, leaving lead prices under pressure. LME lead is expected to trade at $1,930-1,990/mt next week. SHFE lead, in March, both domestic lead ingot supply and demand increased, and with imported lead supplementing supply, the destocking speed of lead ingots has been slow, leaving insufficient momentum for lead prices to rise. The secondary lead segment is currently in a loss-making state, and some smelters have slowed the pace of resuming production, providing support for lead prices. In addition, next week is the week before delivery for the SHFE lead 2603 contract, and suppliers will transfer inventory and ship to delivery warehouse; expectations of a cumulative increase in visible inventory may weigh on lead prices. Overall, the most-traded SHFE lead contract is expected to trade at 16,600-17,000 yuan/mt next week. Spot price forecast: 16,500-16,700 yuan/mt. Demand side, the operating rate of lead-acid battery enterprises rose, and their lead ingot purchases will rise accordingly, with more expectations of purchasing as needed. Supply side, primary lead smelters’ production was steady to slightly higher, and market circulating supply was ample; however, considering the factor of shipping to delivery warehouse, this may ease suppliers’ pressure to make shipments, keeping spot discounts stable, while secondary refined lead smelters have resumed work at a slightly slower pace and, amid losses, secondary refined lead smelters will hold prices firm in shipments, with limited widening of discounts.

[SMM Aluminum Price Weekly Review: Middle East Geopolitical Conflict Drove a Sharp Surge in Aluminum Prices; In the Short Term, Aluminum Prices Are Expected to Hold Up Well]

Federal Reserve Governor Milan reiterated that, despite improvements in the labour market, he still expects the US Fed to cut interest rates by 100 basis points in 2026 and prefers taking action sooner rather than later.

Futures: Overnight, LME lead opened at $1,964/mt, fluctuating rangebound around the daily average during the Asian session. It initially fell then rose during the European session, touching a high of $1,968.5/mt before pulling back again, exploring a low of $1,949.5/mt, and finally closed at $1,952/mt, down $14.5/mt, a decrease of 0.74%. During the Chinese New Year holiday, LME lead showed a weak and rangebound trend, overall trading between $1,943.5/mt and $1,974/mt. As of 18:00 on February 23, it closed at $1,962.5/mt, down $9.5/mt compared to the pre-holiday (February 13) closing price. SHFE lead was closed for the Chinese New Year holiday. On the macro front: Reportedly, US President Donald Trump posted on social media on February 21, stating that the "global import tariff" rate he announced the previous day on goods imported into the US would increase from 10% to 15%, "effective immediately." Global tariff changes became the main factor affecting market pricing during the holiday. US Customs stated that it would stop collecting tariffs ruled unconstitutional by the Supreme Court starting February 24. The US January CPI increased by 2.4% YoY, slowing down from expectations of 2.5%, hitting a new low since May 2025; core CPI rose 2.5% YoY, a new low since March 2021. The unexpected cooling of January inflation data added further support to market expectations for the US Fed to cut interest rates within the year. Domestically, China continued to promote large-scale equipment upgrades this year, with equipment renewal projects in multiple sectors accelerating their implementation. Currently, the new round of equipment upgrades for 2026 has been successively launched in 31 provinces (autonomous regions, municipalities) and the Xinjiang Production and Construction Corps, involving about 20 sectors including industry, electronic information, and energy conservation, carbon reduction, and environmental protection. Spot fundamentals: Before the Chinese New Year holiday, lead market trading gradually halted. On the last trading day before the holiday, SHFE lead showed a consolidating and pulling back trend, as traders closed positions for the holiday, and futures trading activity also declined synchronously. Suppliers largely stopped offering quotes or were already on holiday. The last batch of downstream enterprises entered the holiday state that afternoon, leaving the lead market in a state of no prices and no trading. Inventory side: On February 23, LME lead inventory was 286,325 mt, an increase of 53,675 mt compared to the pre-holiday (February 13) level of 232,650 mt. As of February 12, SMM lead ingot social inventory across five regions again refreshed the 5-month high. Today's lead price forecast: Due to varying holiday schedules for upstream and downstream enterprises during the Spring Festival, the main lead consumption end was almost entirely on holiday and shut down, while the refined lead supply end enterprises had fewer holiday shutdowns than downstream enterprises. Medium and large primary lead enterprises basically operated normally. Lead consumption was absent during the holiday period, leading to expectations of conventional inventory buildup for lead ingots after the holiday. Regarding post-holiday work resumption, lead-acid battery enterprises are expected to resume production gradually from the first to the second week after the holiday. However, as some downstream enterprises still had leftover lead ingot stockpiles from before the holiday, procurement expectations are limited for the first week after the holiday. Although secondary lead enterprises' production resumption plans are mostly scheduled for the second week after the holiday, primary lead smelters maintained relatively normal production. In-factory inventory accumulated during the Spring Festival holiday is expected to be gradually shipped under long-term contracts or transferred to social warehouses after the holiday. The expectation of lead ingot inventory buildup is also likely to be a main factor putting pressure on lead prices in the initial period after the holiday. As downstream lead enterprises resume work and lead consumption recovers normally, lead prices may see opportunities for fluctuating rebounds. Data source statement: Except for public information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.

Today, the most-traded BC copper 2603 contract opened at 90,360 yuan/mt. At the beginning of the session, copper prices tested a low of 90,110 yuan/mt, then fluctuated upward, approaching a high of 91,020 yuan/mt near the close, and finally settled at 90,790 yuan/mt, up 0.42%. Open interest fell to 4,485 lots, down 388 lots from the previous trading day, while trading volume dropped to 3,022 lots, down 3,104 lots from the previous session. On the macro front, Trump called on the US Fed to cut interest rates, but officials stated that inflation remains relatively high and there is no urgent need for rate cuts. US December retail sales data fell short of expectations, and copper prices maintained a fluctuating trend. On the fundamentals side, imported supply continued to arrive, leading to looser availability of spot material in the market. Demand side, weakened further as the holiday approached, with downstream enterprises having largely completed pre-holiday stockpiling, resulting in low purchase willingness at this stage. The market showed a clear pattern of weak supply and demand. The most-traded SHFE copper 2603 contract settled at 102,180 yuan/mt. Based on the BC copper 2603 contract price of 90,790 yuan/mt, its after-tax price is 102,593 yuan/mt. The price spread between the SHFE copper 2603 contract and BC copper was -413, maintaining an inverted spread which widened compared to the previous day.

SMM Morning Meeting Minutes: LME copper opened at $13,089/mt overnight, with prices initially trending lower to test $13,060/mt, then fluctuating upward to touch a high of $13,160/mt, followed by wide swings before finally settling at $13,100/mt, down 0.64%. Trading volume reached 12,200 lots, and open interest stood at 325,000 lots, down 1,683 lots from the previous session, overall showing a reduction in long positions. The most-traded SHFE copper contract opened at 101,660 yuan/mt overnight, initially fluctuating upward to touch a high of 102,100 yuan/mt, then experiencing wide swings while testing a low of 101,510 yuan/mt, before prices trended higher and finally settled at 101,730 yuan/mt, down 0.13%. Trading volume reached 34,800 lots, and open interest stood at 158,000 lots, down 1,466 lots from the previous session, overall showing a reduction in long positions.