Market attention turns to escalating geopolitical tensions this Monday morning, with significant developments in the Middle East and notable movements across commodities markets.

Yemen's Houthi spokesperson Yahya reported on Sunday that Saudi Arabia had conducted 58 airstrikes across Yemen within a 24-hour period, targeting provinces including Taiz, Lahij, Al Jawf, Hudaydah, Al Bayda, and Saada using F-15 fighter jets from the Khamis Mushait air base. Saudi authorities have yet to respond to these claims.

Meanwhile, Yemeni government forces reported that a month-long confrontation with the Houthi group in western coastal regions and surrounding islands has resulted in approximately 2,000 casualties among government troops. The Houthi side has suffered over 1,000 deaths and thousands of injuries, according to statements from the "National Resistance Forces," a military organization affiliated with the Yemeni government. The conflict, which began with Houthi missile and drone attacks, has expanded from southern Hudaydah province along the Red Sea coast to the neighboring Taiz province between August 9 and September 10.

In a related diplomatic development, Oman's Foreign Ministry announced late Sunday that a regional meeting scheduled for Wednesday in the southern port city of Salalah would be postponed, with a new date to be confirmed later. The ministry stated the delay aims to create appropriate conditions for constructive dialogue and foster sustainable consensus that would support regional security, stability, and the aspirations of regional peoples for cooperation and peace. Oman's Foreign Minister Badr also took to social media to confirm the postponement, emphasizing Oman's continued commitment to regional dialogue.

This postponement follows Iran's earlier indication that Persian Gulf states, including Iran and Iraq, would convene in Oman to exchange views on establishing safe commercial shipping routes through the Strait of Hormuz. Notably, Bahrain's Foreign Ministry announced last Thursday that it would not participate, stating it would avoid any collective meetings involving Iran until diplomatic relations are restored between the two nations.

International oil prices have responded sharply to these developments, with WTI crude futures surging 3% to $103.101 per barrel. Traders and industry sources report that an interruption in Saudi oil pipeline flows could potentially reduce global oil supply by 4% if not restored within days. Saudi storage capacity at Yanbu port is reportedly sufficient for only 5-7 days of exports, with additional limited reserves held in Egypt.

Turning to domestic Chinese markets, last week saw overall weakness in commodity futures, with new energy and ferrous metal sectors experiencing notable declines. According to Chen Hansong, a new energy researcher at Galaxy Futures, September battery production schedules have been revised downward due to insufficient copper foil and anode material supply, leading to lower overall lithium battery output. On the supply side, accelerated return of overseas lithium ore has increased port inventories, while domestic lithium salt production continues to grow. Inventory data indicates the market has entered a destocking phase. Regarding polysilicon, September silicon wafer production remains largely unchanged from August, keeping demand within 100,000 tons. Producers have maintained output levels, with September production estimated at 116,000 tons, sustaining the industry's inventory accumulation pattern. Manufacturers have reached a consensus against selling below cost, potentially driving stronger polysilicon spot prices if downstream companies begin procurement in late September. Until then, market movements will likely be influenced more by capital flows and sentiment, with prices expected to trade within a range.

In the ferrous metals complex, Liu Mengmeng, a ferrous researcher at Huishang Futures, explains that coking coal prices had previously surged due to supply disruptions, with Shanxi low-sulfur main coking coal rising from 1,450 yuan per ton to near 2,600 yuan per ton, pushing valuations and basis to elevated levels. Last week witnessed cooling auction activity and increasing failed auctions, prompting washeries and traders to shift toward selling, while production has recovered. Following the fifth round of coke price hikes, the phase of positive catalysts has largely concluded. On the demand side, steel mills' profit margins have contracted, with negative feedback loops transitioning from expectations to reality. Data shows the profitability rate among 247 sampled steel mills has plummeted to 7.79%, down 22.51 percentage points week-over-week, with over 90% of surveyed mills operating at a loss. Daily hot metal output stands at 2.3629 million tons, a slight decrease of 5,300 tons. Lower scrap prices and rebounding finished steel prices have encouraged electric arc furnace production, squeezing blast furnace capacity. Raw material price gains have far exceeded finished product increases, breaking cost transmission channels and prompting mills to slow production resumption while pressuring procurement prices. Construction material transaction volumes and apparent consumption have declined month-over-month, with the traditional "Golden September" season starting weaker than expected.

Liu believes this collective decline in the ferrous complex stems from adjustments triggered by weakening cost support, with the magnitude and duration dependent on whether coking coal supply recovery materializes. Given that Mongolian coal imports have not genuinely resumed and safety inspections remain constraints, downside space appears limited, though upside momentum has been weakened. The market will likely enter a wide trading range after shifting lower. Coking coal and coke exhibit the highest price elasticity and volatility risk; current futures prices trade at deep discounts to spot, having already priced in supply recovery expectations. Should actual recovery proceed slower than anticipated, substantial upside potential exists, whereas faster-than-expected recovery would open downside room. Liu warns of risks including cost collapse transmitting to finished products once coking coal supply recovery is confirmed, steel mill production cuts spreading from localized to mainstream regions creating demand-side negative feedback, and the possibility of policy sentiment triggering rebounds in the ferrous sector ahead of fundamental improvements.

Investors are advised to monitor these geopolitical developments and commodity market dynamics closely as they continue to influence global financial markets.