Today's futures market saw more declines than gains.
In the ferrous sector, coke fell 4.13% and coking coal dropped 1.85%. Among non-ferrous metals, Shanghai tin declined 4.10% and alumina decreased 2.74%. In the energy and chemical sector, low-sulfur fuel oil dropped 4.73% and LPG fell 4.38%. In the agricultural products sector, white sugar fell 1.18% while rapeseed meal rose 1.23%.
LU Fuel Oil
Market Performance Recap
The initial round of US-Iran negotiations and the resulting agreement document led to a retreat in market risk aversion. Following the US's phased relaxation of sanctions on Iranian crude oil, concerns over Middle Eastern oil and fuel oil supply gradually eased, causing low-sulfur fuel oil to trend downwards with a maximum drop exceeding 5%. The main contract closed at 3,823 yuan per ton, down 4.73%.
Drivers of Volatility
(1) Cost Side: According to an announcement from the US Treasury's Office of Foreign Assets Control, transactions involving the production, delivery, and sale of Iranian crude oil, petrochemicals, and petroleum products, previously prohibited by multiple US executive orders and regulations, have been granted an exemption valid until August 21, 2026. The announcement also indicated that importing Iranian crude oil, petrochemicals, and petroleum products into the US is now permitted. Additionally, Iranian Foreign Minister Alagchi stated on social media on the 22nd: "Exports of oil and petrochemical products have been exempted, the blockade has been lifted, some assets have been unfrozen, and a major Iranian reconstruction and development plan has been launched." International crude oil prices continued to decline, lowering the cost base for low-sulfur fuel oil.
(2) Supply Side: Domestic refinery capacity utilization rates remain low. However, with eased Middle East tensions and relaxed sanctions on Iranian crude, there is an expectation for a rapid recovery on the supply side.
As of June 18, the capacity utilization rate for atmospheric and vacuum distillation units at major refineries was 67.23%, down 0.13% month-on-month and 12.6% year-on-year. The decline narrowed as a major refinery in Shandong reduced its operational load while CNOOC Taizhou commenced operations.
As of June 18, the capacity utilization rate for atmospheric and vacuum distillation units at China's independent oil product refineries was 43.47%, down 2 percentage points from the previous week. Due to recent equipment failures at some refineries, capacity utilization rates at plants in major regions like Northeast China, Shandong, and South China have seen significant reductions.
(3) Demand Side: There is currently no positive demand news from domestic downstream end-users. Bunkering companies are pricing their sales based on procurement costs. Affected by inspections, wholesalers' deliveries remain unsmooth, leading to a continued decline in national wholesale shipments and a month-on-month increase in wholesalers' finished product inventories.
As of June 18, inventories of marine heavy oil increased slightly compared to the previous period, mainly due to the resumption of normal production in some regions, which boosted finished bunker fuel inventories.
(4) Inventory Side: With crude oil prices continuing to fall, market participants' trading confidence has been dampened, leading to cautious purchasing. Refinery sales are sluggish, and it is anticipated that refinery inventories in the Shandong region may see a slight increase this week.
As of June 18, the inventory rate for slurry oil in Shandong was 15.3%, up 0.3% from the previous period. The inventory rate for residual oil in Shandong was 2.8%, down 3.6% from the previous period. The inventory rate for wax oil in Shandong was 0.7%, up 0.1% from the previous period.
(5) International Market Side: The price spread between high-sulfur fuel oil and ultra-low sulfur fuel oil has widened, with the ultra-low sulfur fuel oil market remaining relatively firm. India's Mangalore Refinery and Petrochemicals Ltd. sold 30,000 tons of low-sulfur marine fuel for loading on July 2-3, with bidding closing on June 19. Increased processing of US low-sulfur crude in Japan and South Korea has expanded the export space for low-sulfur fuel oil. A South Korean oil company is considering importing low-sulfur fuel oil for July loading; however, purchases of US fuel oil may cease if Middle Eastern crude supply recovers. Singapore fuel oil inventories have rebounded from low levels.
As of the week ending June 17, 2026, Singapore's fuel oil inventories stood at 14.991 million barrels, a decrease of 151,000 barrels from the previous period, down 1.02% week-on-week.
Outlook
Currently, low-sulfur fuel oil spot supplies are relatively tight, and demand from the bunkering sector is performing well. The opening of the straits is expected to stimulate a phased increase in shipping activity, further boosting marine fuel oil consumption. However, from a medium-term perspective, with the resumption of operations at Kuwaiti refineries and the market environment gradually returning to pre-war conditions, the surplus production capacity for low-sulfur fuel oil is relatively ample. Furthermore, the transformation of bunker fuel consumption patterns will further erode the market share of low-sulfur fuel oil. The overall fundamental picture may revert to a looser state, with weak market drivers. With costs continuing to decline, low-sulfur fuel oil prices are expected to follow the weaker trend in crude oil in the short term.
Shanghai Tin
Market Performance Recap
On June 23, the main Shanghai tin contract (2607) fell sharply. It opened high during the night session at 423,000 yuan per ton, experienced volatile swings, and continued to decline during the day session. By the afternoon close, it was reported at 400,070 yuan per ton, down 4.1%, with intraday volatility exceeding 20,000 yuan.
Drivers of Volatility
(1) Macro Factors: The June FOMC meeting released hawkish signals. The dot plot showed that 9 out of 18 officials projected at least one interest rate hike within the year. The strong US dollar index exerted downward pressure on commodity valuations. Simultaneously, the signing of a US-Iran memorandum of understanding and the temporary easing of sanctions on Iranian energy led to a dissipation of the geopolitical risk premium associated with the Strait of Hormuz. Coupled with a significant correction in the US tech stock sector, speculative sentiment around AI computing metals cooled, leading to concentrated capital outflows from the non-ferrous metals sector. The confluence of these multiple factors triggered a correction in tin prices.
(2) Raw Materials Side: Due to continued low mining efficiency during the rainy season in Wa State, substantial improvement in tin concentrate treatment charges (TC) is difficult. As the rainy season nears its end in July-August, if substantial progress is made in Wa State's resumption of production (explosives permit release + drainage completion + transport restoration), marginal easing on the ore supply side could potentially drive TC recovery.
(3) Supply and Demand Side: Operating rates at refined tin smelting enterprises in Yunnan and Jiangxi provinces showed a slight decline. Production in the Yunnan region remained at the relatively high level of 80%-90% seen previously, while the Jiangxi region continued to be constrained at a low range around 35%. On the consumption side, demand is primarily driven by seasonal necessities, and the pace of destocking has slowed. After the post-holiday tin price rebound above 410,000 yuan, downstream willingness to accept prices was significantly limited, spot transactions weakened, and the pace of social inventory drawdown slowed. Following the fading of the previous wave of bargain-hunting restocking, and dragged down by the traditional off-season for end-consumption, the sustainability of inventory digestion is questionable.
(4) Inventory: Last week, social inventories of tin ingots only decreased by just over 500 tons. LME tin inventories slightly decreased to 8,965 tons, indicating a mild pace of destocking.
Outlook
Overall, the rigid constraints on the tin raw material side remain unchanged. Tightness in ore supply provides solid support for tin prices, but the strength of this support is expected to weaken. Last week's hawkish Fed meeting and the strong US dollar formed valuation pressure on tin prices. This week, focus will be on comments from Fed officials and domestic inventory destocking progress. Amid the interplay between macro factors and fundamentals, Shanghai tin is expected to experience wide fluctuations in the short term, with overall slight downward pressure.
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