Fed Hawkish Signals Exceed Expectations; Precious Metals Under Short-Term Pressure but Downside Limited June 18 — At 2:00 AM Beijing Time on June 18, the Federal Reserve kept the federal funds rate unchanged at 3.50%-3.75%, marking the fourth consecutive hold. The statement was significantly shortened in length and removed language hinting at further rate cuts. The dot plot showed nine officials expect a rate hike this year, while newly appointed Chairman Warsh did not submit a dot plot and declined to provide forward guidance. Hawkish signals pushed market pricing for a year-end rate hike up to 38 basis points. From a policy perspective, this FOMC meeting delivered hawkish signals that exceeded market expectations. Combined with the return of rate-hike expectations in the dot plot, it signals that the Fed's communication tone has shifted from "pause and watch" to "potential hiking," putting near-term pressure on precious metals. However, the fourth consecutive hold itself was in line with market expectations, and any actual rate hike still requires more data for validation, so the marginal impact of the policy signal itself is relatively limited. More critically, earlier economic data — U.S. May nonfarm payrolls rose by 172,000, beating expectations, with a combined upward revision of 93,000 for March-April — underscores that labor market resilience remains the most significant headwind suppressing rate-cut expectations and is the core bearish factor for precious metals recently. By contrast, May headline CPI matched expectations while core CPI came in slightly below consensus, meaning inflation data did not reinforce the tightening narrative beyond expectations, and its bearish impact is comparatively moderate. On balance, precious metals face dual pressure from hawkish policy signals and labor market resilience, but the elevated rate-hike expectations are still in the pricing-in phase, and the market may not form a systemic downward resonance at current levels. The trading logic will continue to hinge on subsequent nonfarm payrolls, CPI data, and actual communication from Warsh. US-Iran Peace Talks Advance; Geopolitical Risk Premium Unwinds June 18 — The presidents of the United States and Iran have signed an electronic memorandum of understanding (MoU). The official 14-point text largely matches prior media disclosures, and both sides are set to formally sign the agreement in Switzerland on Friday. Trump stated that if follow-up implementation of the MoU falls short of satisfaction, bombing operations would resume, and also revealed discussions with Syrian leaders on striking Hezbollah. Meanwhile, southern Lebanon witnessed multiple Israeli attacks, and Israel's finance minister indicated no withdrawal on Friday or thereafter. The geopolitical situation remains in a complex tug-of-war characterized by "negotiations alongside conflict." In the near term, the signing of the MoU marks a substantive phase in ceasefire negotiations, with market expectations for the reopening of the Strait of Hormuz strengthening, leading to further unwinding of the risk premium. Should the formal agreement be finalized on Friday, structural concerns over crude supply would materially ease, putting downward pressure on the oil price center, which in turn would cool global inflation expectations. From a medium-to-long-term perspective, if sustained oil weakness drives down energy costs, the Fed's monetary policy room would reopen, and market logic could gradually shift from "tightening expectations" toward a "rate-cut cycle," potentially offering new macro support for precious metals. Overall, US-Iran relations are currently in a phase of "peace talks advancing, conflicts unresolved," and market pricing will revolve around Friday's agreement implementation and subsequent execution risks in a repeated back-and-forth manner. Early Hiking Cycle Pressure Does Not Alter Long-Term Logic; Precious Metals' Allocation Value Remains Prominent Historical experience shows that in the early stages of every rate-hiking cycle, precious metals typically come under pressure from rising nominal rates and a stronger dollar, but the trend is not unidirectional downward. As the hiking cycle deepens, growing concerns over recession risks and liquidity stress increasingly highlight gold's role as an inflation hedge and safe-haven asset, with its price center tending to rise in the middle-to-late stages. Therefore, even if the Fed continues on a hawkish path, the pressure on precious metals may not be sustained; liquidity conditions and shifts in macro expectations also influence price dynamics. Of course, our overall bullish long-term logic for precious metals remains unchanged: First, global central banks continue to accumulate gold, with de-dollarization and reserve diversification strategies providing a solid floor for gold prices. Second, the U.S. dollar's credit system faces deep erosion — high interest rates on U.S. Treasuries imply high risk, and over the long run, U.S. debt rollover pressures and fiscal indiscipline are accelerating global de-dollarization. Third, the ever-expanding U.S. government debt stock and deteriorating fiscal sustainability raise the risk of future debt monetization and dollar depreciation. As a non-liability, supra-sovereign hard asset, gold's safe-haven and store-of-value functions hold irreplaceable appeal in the current macro environment. At the same time, geopolitical conflicts continue to simmer without truly subsiding, while global supply chains and energy markets remain volatile, with inflation persistence lingering. These uncertainties will collectively underpin the demand for gold and silver as safe-haven allocation assets, further boosting their strategic value over the medium-to-long term. From the Gold/Silver Ratio Perspective: Silver Under Pressure in the Short Term, but Outperforming Gold in the Medium-to-Long Term Remains Intact Historically, the gold/silver ratio exhibits significant mean-reverting behavior, with its long-term center roughly fluctuating between 60 and 70. However, under extreme macro environments, it can deviate markedly — for instance, the ratio widened sharply after the 2008 financial crisis and approached a historical extreme near 120 during the 2020 pandemic. The underlying dynamic is that during extreme risk-off episodes, the market prioritizes gold as a safe-haven asset, while silver, burdened by its industrial metal characteristics, tends to face systematic selling. Thus, the gold/silver ratio's cyclical movement can be summarized as: widening during crises (silver underperforms) and narrowing during recovery/inflation cycles (silver outperforms). Its essence is a cyclical indicator driven by the alternating dominance of safe-haven attributes versus industrial attributes. In the near term, the gold/silver ratio is more prone to stage-wise upward moves or range-bound drift with an upward bias. On one hand, silver has already posted notable gains, with crowded positioning making it more vulnerable to pullback pressure. On the other hand, the photovoltaic industry — a key pillar of silver industrial demand — is expected to see cell silver consumption decline by 9.51% year-over-year in 2026, and with ongoing silver-reduction progress and evolving cell product structures, annual silver consumption is projected to maintain a roughly 5 percentage-point decline through 2030. Although positive terminal installation expectations may boost cell production volumes, translating to some incremental demand, when converted to silver demand, a roughly 20% decline is anticipated this year. Over the long cycle, 2026 also marks a pivotal turning point in silver's industrial demand structure. The low-voltage electrical equipment sector, as a rigid support segment, exhibits strong irreplaceability in its silver demand. Emerging sectors such as new energy vehicles, PCBs, and SiC chips are rapidly expanding their end-market bases, and despite unchanged unit silver consumption, overall demand continues to grow steadily. Therefore, we maintain our core view that the gold/silver ratio will trend downward in the medium-to-long term — i.e., we are constructive on silver outperforming gold. The driving logic will gradually shift from rates and liquidity toward energy transition and industrial demand. Silver is transforming from a traditional precious metal into a strategically important industrial metal with rising exposure to photovoltaics, AI data centers, and grid upgrades, while supply remains highly inelastic due to its heavy dependence on lead-zinc and copper byproduct production. Once the global economy enters a rate-cutting cycle or real rates decline, silver's industrial elasticity will significantly amplify its upside potential, whereas gold, supported more by central bank buying and safe-haven demand, tends to follow a smoother trajectory.

[Silicon metal futures fluctuate narrowly, spot market largely stable]: Downstream and trader procurement sentiment is cautious, with some users digesting previous low-price inventories. Clients outside China have purchase price expectations lower than current prices, and sentiment for new orders in the market is sluggish. Some users expect to purchase via futures point pricing at around 8,400-8,500 yuan/mt. On the supply side, the increase in operating rates of silicon enterprises in Sichuan and Yunnan during the rainy season is already within expectations, with few new variables in the market. As variables on both supply and demand sides are highly deterministic in the short term, market sentiment in the buyer-seller tug-of-war appears rational. The silicon metal price center is expected to remain near the low end of the range in the near term.

SMM Weekly Stainless Steel Futures Review — week of June 15–18, 2026. A mid-week hawkish Fed turn capped an early rally, but supply tightening and firm mill pricing lifted the SHFE board RMB 355/mt on the week of June 15–19.

[SMM Hot Topic] Middle East Steel Export Flows Shift: Finished Products Stall and Steel Billet Counterattacks 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: 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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[SMM Analysis] Sulfur Price Outlook: The Game Between Geopolitical Premium Fade and Supply Recovery Lag

June 16, 2026 The price of gold continues its recovery at the start of the week. The prospect of a peace agreement between the U.S. and Iran is pushing the price of oil below $80 per barrel, thereby easing concerns about inflation and interest rates. Despite the strong rebound, however, the technical picture remains weak. Hopes for peace provide relief via falling oil prices The U.S. and Iran plan to sign their peace agreement on Friday. For the price of gold, the resulting price slide in the oil market is currently the decisive driver, even overshadowing the dampening effect of easing geopolitical uncertainty. Falling energy costs reduce inflationary pressure and lessen the risk of further interest rate hikes. Gold has since pulled back significantly from its recent low of around $4,000 per ounce. Analysts, however, urge caution: political risks remain until the agreement is actually signed. A failure of the deal could quickly bring the $4,000 mark back into focus. In addition, the oil supply remains structurally tight. Since many governments drew heavily on their strategic reserves to stabilize prices during the conflict, buffers are now lacking. The oil market is therefore likely to react sensitively to new supply disruptions, which could quickly reignite inflation and interest rate concerns. Technical Analysis: Key Resistance Levels Ahead By successfully defending the $4,000 mark, gold has cleared its first hurdle. However, for a significant stabilization, the price must reclaim the 200-day moving average at around $4,450. Above that, the 50-day line awaits at around $4,581. A breakout above the interim high of May 12 at $4,773 is considered a decisive signal for a sustained upward trend. Focus on the Fed meeting Fundamentally, attention is turning to the Federal Reserve ’s first interest rate meeting under new Chairman Kevin Warsh. While the market continues to anticipate a potential rate hike by early 2027 at the latest, should Warsh signal that the Fed views the peace agreement as price-dampening and overlooks current inflation, this would provide significant relief for interest-rate-sensitive assets such as gold. For now, high real yields are limiting the precious metal’s upside potential. The current recovery of just over 3 percent underscores its high sensitivity to energy prices and interest rate expectations. Whether this leads to a genuine trend reversal now depends on the successful signing of the agreement, stabilization in the oil market, and upcoming signals from the Federal Reserve. Source: https://goldinvest.de/en/gold-continues-to-appreciate-hopes-for-peace-weigh-on-oil-prices-and-interest-rate-concerns

In H1 2026, the Indonesian 10-12% high-grade NPI (delivered to port, tax inclusive) market trended steadily upward, with the SMM average price rising 12% compared to the same period in 2025. Price movements were characterized by “stepwise increases and fluctuations at highs.” Each round of supply-demand imbalance and policy disruption pushed prices onto a higher level.

The most-traded iron ore contract continued to decline today. The most-traded I2609 contract closed at 747.5 yuan/mt, down 2.61% from the previous trading session, with the decline widening notably. Port spot prices also fell, down 10-15 yuan/mt from the previous day. Traders diverged in their actions—some suspended offers to wait and see, while others sold at prevailing market prices. Steel mills maintained a cautious sentiment with a strong desire to bargain down prices, slowing their procurement pace. Overall market trading atmosphere was subdued, and spot transaction volumes were limited as of now. According to an SMM survey, as of June 17, the blast furnace operating rate among the 242 steel mills tracked by SMM stood at 90.67%, up 0.20 percentage points MoM. The sample mills' daily average hot metal output reached 2.465 million mt, up 5,300 mt MoM. However, looking ahead to next week, as pressure from losses at steel mills intensifies, more maintenance plans are arising, and hot metal output may reach a turning point. On the demand side, a marginal weakening is expected, which, combined with ongoing supply-side pressure accumulation and the industrial off-season effect, will jointly weigh on iron ore prices, causing the decline to deepen further. In the short term, market pessimism dominates, and iron ore prices are expected to continue to consolidate at lows.

SMM, June 17: In the metals market: As of the midday close, base metals on the domestic market showed mixed performance. SHFE copper edged up 0.33%, SHFE aluminum edged up 0.17%, SHFE lead increased 1.04%, SHFE zinc fell 0.48%, SHFE tin fell 0.33%, and SHFE nickel fell 0.22%. In addition, the most-traded foundry aluminum futures contract rose 0.58%, the most-traded alumina contract fell 0.1%, the most-traded lithium carbonate contract rose 1.54%, the most-traded silicon metal contract edged up, and the most-traded polysilicon futures contract fell 1.68%. Ferrous metals mostly fell, with iron ore down 1.89%, rebar down 0.38%, HRC down 0.3%, and stainless steel up 0.66%. In coking coal and coke: the most-traded coking coal contract fell 0.48%, and the most-traded coke contract fell 0.95%. For base metals on the overseas market, as of 11:39, LME metals showed mixed performance. LME copper and LME nickel edged up, LME aluminum rose 0.53%, LME lead fell 0.1%, LME zinc rose 0.13%, and LME tin rose 0.27%. In precious metals, as of 11:39, COMEX gold fell 0.08%, and COMEX silver rose 0.39%. On the domestic precious metals market: the most-traded SHFE gold contract fell 0.26%, and the most-traded SHFE silver contract fell 0.27%. In addition, as of the midday close, the most-traded platinum futures contract rose 1.59%, and the most-traded palladium futures contract edged up. As of the midday close, the most-traded container shipping index futures contract fell 2.95% to 3,697.5 points. Selected futures midday quotes as of 11:39 on June 17: Spot and Fundamentals Copper: Today, spot #1 copper cathode in Guangdong against the front-month contract: high-quality copper was quoted at 210 yuan/mt, unchanged from the previous trading day; standard-quality copper was quoted at a premium of 150 yuan/mt, unchanged from the previous trading day; SX-EW copper was quoted at a premium of 90 yuan/mt, unchanged from the previous trading day. The average price of Guangdong #1 copper cathode was 105,500 yuan/mt, up 565 yuan/mt from the previous trading day, and the average price for SX-EW copper was 105,410 yuan/mt, up 565 yuan/mt from the previous trading day. Spot market: Guangdong inventory declined again today after two consecutive days of increases, mainly due to fewer arrivals and more shipments... Macro Front China: [NFRA: Promote the flow of financial resources toward emerging and future industries] Ding Xiangqun, head of the National Financial Regulatory Administration (NFRA), stated that serving the real economy is the foundation of finance. It is necessary to optimize the supply structure of funds, deliver on the five priority areas of finance, and focus on promoting the development of new quality productive forces. The country should continuously improve full-cycle tech-finance service systems, strengthen financing support and insurance guarantees, and promote the flow of financial resources toward emerging and future industries. Efficiently support the strategy of expanding domestic demand. Financial regulatory authorities should guide financial institutions to deeply engage in fiscal-financial coordination to boost domestic demand, help implement the special campaign to invigorate consumption and the action to expand capacity and improve quality in the service sector, and strengthen financial services for major projects under the 15th Five-Year Plan. Enhance financial support for vulnerable areas. Promote a substantial improvement in quality and reasonable growth in volume for loans to small and micro enterprises. Develop tailored inclusive financial products for new employment groups, namely the "two drivers and two delivery workers"—truck drivers, ride-hailing drivers, couriers, and food delivery workers. Continuously improve the level of financial services for disaster prevention, mitigation, and relief, and fortify the line of defense for public safety. (CCTV News) [PBoC: Improve the short-end interest rate adjustment mechanism] Pan Gongsheng, Governor of the People's Bank of China, stated that the short-end interest rate adjustment mechanism will be improved. Building on the temporary overnight standing repo and reverse repo facilities established in July 2024, the mechanism for using these tools will be refined, and the operating rates will be adjusted to the 7-day reverse repo operating rate plus and minus 25 basis points, narrowing the corridor from 70 basis points to 50 basis points. The toolbox for open market operations will be further enriched, and overnight reverse repo operation instruments will be added when appropriate to better match the short-term liquidity needs of the banking system. (CCTV News) [Full text of the Action Plan for Shanghai International Financial Center to Develop Offshore Finance is released] The People's Bank of China, the National Development and Reform Commission (NDRC), the National Financial Regulatory Administration, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and the Shanghai Municipal People's Government jointly issued the Action Plan for Shanghai International Financial Center to Develop Offshore Finance. It mentions that by the end of 2027, a preliminary institutional framework encompassing business rules, risk management and resolution, and the business environment adapted to offshore financial businesses is expected to be established, with explorations of offshore financial business at the forefront of digitalization to better serve enterprises going global. By the end of 2030, a relatively mature offshore financial institutional and legal framework is expected to gradually take shape, providing secure and reliable financial services for the sustained international investment and trade of Chinese enterprises, conducting tests for the reform of the onshore financial system, and strongly supporting the development of global allocation and risk management functions for RMB assets. By the end of 2035, it is expected to become a strategic hub for high-level coordinated and integrated development of offshore and onshore finance, leading the nation's high-standard financial opening and high-quality development. (From Wallstreetcn APP) [People's Bank of China launches the Foreign Institutional Investor and Central Banks RMB Repo Facility] To support the high-standard opening of China's financial market and facilitate RMB liquidity management for foreign central bank institutions, the People's Bank of China will use the Foreign Institutional Investor and Central Banks RMB Repo (FIMA RMB Repo) facility to provide RMB liquidity to eligible foreign central bank institutions. Overseas central bank-type institutions refer to overseas central banks or monetary authorities, international financial organizations, and sovereign wealth funds. The repo tool can be conducted via pledged repo or outright repo. Eligible repo bonds include Chinese government bonds, PBOC bills, policy financial bonds, and other high-grade RMB bonds approved by the PBOC. Repo terms include 7 days, 1 month, and 3 months. Repo rates are set by adding a spread to the 7-day reverse repo operation rate in the open market. (PBOC) [PBOC Optimizes Temporary Overnight Repo and Reverse Repo Operation Mechanism in the Open Market] To use the temporary overnight repo and reverse repo tools in the open market flexibly and efficiently, the PBOC decided to optimize operating parameters effective immediately, adjusting the operation window to 15:00-15:30 on working days and setting the operation rates at the 7-day reverse repo rate minus 25bp and plus 25bp, respectively. It further clarified the rules for using the tools: when the overnight money market rate (DR001) stays persistently below or above the corresponding tool operation rates, the PBOC will launch the relevant operations based on the needs of primary dealers. (PBOC) [Wu Qing: Social Security, Insurers Net Purchases of A-Shares at 1.3 Trillion Yuan Since New “Nine Guidelines”] At the opening ceremony of the 2026 Lujiazui Forum, Wu Qing, Chairman of the China Securities Regulatory Commission, delivered a keynote speech titled “Further Improving Capital Market Functions to Coordinate Investment and Financing, Better Serving New Quality Productive Forces and High-Quality Economic Development.” He said that over the two-plus years since the release of the new “Nine Guidelines,” the market value of A-shares held by social security funds, insurers, etc. increased by 85%, with net purchases of A-shares reaching 1.3 trillion yuan. Wu Qing stated that efforts should be made to actively expand funding sources, support complementarity between state-backed funds and social capital, guide pension funds and insurance funds to increase equity investments, and promote the further smooth functioning of the “fundraising, investment, management, and exit” cycle. (from Wall Street CN APP) [Zhu Hexin: Higher Convenience for Entities with Sound Operations and Good Credit] Zhu Hexin, Deputy Governor of the PBOC and Administrator of the State Administration of Foreign Exchange, said at the 2026 Lujiazui Forum that the next step would be to shift from convenience for individual business items to convenience for business entities, granting higher convenience to entities with sound operations and good credit. (from Wall Street CN APP) [PBOC Reverse Repos Net Injection of 261.3 Billion Yuan Today] The PBOC conducted 420.3 billion yuan of 7-day reverse repos today. With 159.0 billion yuan of such reverse repos maturing today, this resulted in a net injection of 261.3 billion yuan. (Jin10 Data APP) 》On June 17, the central parity rate of the RMB against the US dollar in the interbank foreign exchange market was 6.8096 yuan per US dollar. On the dollar side: As of 11:39, the US dollar index was down 0.03% at 99.53. Option traders are increasingly divided on the US Fed’s near-term interest rate path, placing bets that range from rate cuts in coming months to rate hikes of varying magnitudes. Swaps market pricing shows that the Fed is almost certain to hold interest rates steady at its Wednesday meeting, with all eyes turning to Chairman Warsh’s first press conference for clues on future policy. Although the US and Iran are set to formally sign a temporary peace deal, with oil prices already falling to three-month lows and offering some relief from inflationary pressures, the policy outlook remains uncertain. (Jin10 Data APP) The Federal Reserve will conclude its policy meeting in the early hours of Thursday Beijing time, and the market is now focused on a key variable: the dot plot may lack a key dot. The Federal Open Market Committee (FOMC) will release its quarterly Summary of Economic Projections (SEP) after the meeting, which includes individual officials’ assessments of the interest rate path for 2026 to 2028 and beyond—the closely watched dot plot. Investors will parse the distribution of dots to gauge the overall bias of officials on the economic outlook and monetary policy. However, most Wall Street Fed watchers expect that new Chairman Warsh Kevin (Warsh Kevin) will not submit his own rate projection dot. He only assumed his post on May 22 and feels he has not yet prepared a full forecast; additionally, he has consistently been critical of the dot plot and the broader forward guidance communication framework. Should Warsh decline to submit a dot, it would break from a practice that has persisted for 14 years since the financial crisis, and could also ruffle feathers among FOMC members who rely on the dot plot to convey policy signals. Yet, this move would also serve as his first step in pushing for fundamental reforms at the Fed. (Jin10 Data APP) According to CNBC, the Federal Reserve will release its latest dot plot on Wednesday, showing officials’ expectations for the interest rate trajectory. However, most Wall Street Fed watchers expect new Fed Chairman Warsh Kevin not to participate, possibly because he feels unprepared or simply because he dislikes the dot plot. Warsh has previously spoken out against dot plots and other forward guidance methods, arguing that they constrain the Fed’s decision-making ability. Should Warsh refuse to provide a dot plot projection, it would run counter to the practice the Fed has followed for roughly 14 years since the financial crisis and could distance him from other Fed officials who support this communication tool. Yet, for Chairman Warsh, who has pledged to fundamentally reform the way the institution operates, this could serve as an effective first step. “In my opinion, he likely does not want to submit a rate forecast.”Bill English, former head of monetary policy at the US Fed and now a professor at Yale University, said, “There may be others on the committee who don’t particularly like the dot plot, and they might be willing to do the same.” According to CME FedWatch, the probability that the Fed would keep interest rates unchanged in June was 99.5%, and the probability of a cumulative 25bp rate cut was 0.5%. The probability that the Fed would keep rates unchanged through July was 92%, with a 7.9% probability of a cumulative 25bp rate hike and a 0% probability of a cumulative 25bp rate cut. In other currencies: Goldman Sachs economist Akira Otani said that the Bank of Japan is very likely to raise interest rates again in January 2027, but there is high uncertainty over the timing of future rate hikes. “With underlying inflation near 2%, even a small change, such as a further modest depreciation of the yen, could significantly increase the risk of inflation exceeding 2%,” the economist noted, “Thus, the probability distribution of the timing of the next rate hike is seen as skewed towards an earlier move.” Otani added that the actual timing of the rate hike would be “significantly influenced by the progress of communication with the government.” (Jin10 Data APP) A senior official at the Reserve Bank of Australia said on Wednesday that as a tense geopolitical environment reshapes financial and economic linkages, Australian institutions need to prepare for a financial system that is more susceptible to shocks. RBA Deputy Governor Brad Jones said, “We have to accept the world as it is, not as we would like it to be, and it is against this backdrop that policymakers are intensifying efforts to ensure the financial system can cope with a more challenging risk environment.” Jones noted that the high level of foreign ownership in Australia’s fixed-income market means the country’s financial system will not be immune to external shocks. Referring to pension funds, he said, “About half of the assets in our superannuation fund industry are invested offshore.” (Jin10 Data APP) Data: Due for release today are the US May retail sales month-over-month rate, US April business inventories month-over-month rate, US May pending home sales index month-over-month rate, UK May CPI month-over-month rate, UK May retail price index month-over-month rate, eurozone May final CPI year-over-year rate, eurozone May final CPI month-over-month rate, and other data. Also in focus: ECB President Lagarde is participating in a summit on the impact of artificial intelligence (AI); the 2026 Lujiazui Forum in China takes place from June 17 to 18. Oil: As of 11:39, both oil benchmarks extended their losses from the previous four trading sessions, with WTI down 0.32% and Brent down 0.32%. Trump stated that the Strait of Hormuz will reopen this Friday, with both US and Iranian sides expected to sign a preliminary agreement memorandum in Switzerland at that time, though the full text of the agreement has not yet been released. The preliminary agreement between the US and Iran to reopen the Strait of Hormuz triggered wild swings in the global oil market. According to the Wall Street Journal, people familiar with the matter said that under the agreement, the US will allow Iran to immediately resume oil and fuel export sales, providing Tehran with an upfront economic incentive to help de-escalate the conflict. Provisions in the deal exempting oil sales from sanctions will take effect immediately upon the signing of the agreement this week. Meanwhile, essential services supporting oil sales, such as banking, transportation, and insurance, will also be exempted to ensure smooth execution of relevant transactions. United Against Nuclear Iran stated that a supertanker loaded with Iranian crude oil had departed from Chabahar port, crossed the US blockade, and sailed out of the Gulf of Oman on Tuesday with its transponder turned on. This marks the first such occurrence since the US imposed a maritime blockade in April this year. A senior US official said on Tuesday that while Iran will receive upfront sanctions relief for oil sales, long-term and sustained sanctions relief will depend on Iran's compliance with US demands, including issues related to the opening of the Strait and its nuclear program. The official added that Iran still will not immediately gain access to tens of billions of dollars frozen outside China. (Jin10 Data APP) Spot Market Overview: ► ► ► ► ► ► ► ► ► ► ► ►

HRC futures prices were in the doldrums today, with the most-traded contract closing at 3,382, up 0.29%. In the spot market, spot HRC prices saw a slight correction in many regions during the day, while cold galvanized prices were largely stable. On the news front, Zhangjiagang HRC inventory this week was 271,000 mt, down 2,000 mt WoW, a 0.73% decline. The pace of inventory decline in Zhangjiagang slowed WoW, with destocking gradually slowing recently due to weakening downstream demand. From a fundamental perspective, HRC inventory is expected to continue destocking this week. The accumulation of supply-demand imbalance in sheets & plates is limited. The market will likely follow raw material prices to trade sideways this week, awaiting inventory turning to build or a drop in hot metal output to trigger a supply-demand imbalance in raw materials.