China’s commodity index in November 2021 From China Federation of logistics and procurement
The following is the China’s commodity index in November 2021 From China Federation of logistics and procurement recommended by recordtrend.com. And this article belongs to the classification: Chinese economy.
China’s commodity index in November 2021, surveyed and released by China Federation of logistics and purchasing, was 99.2%, falling to the lowest level since February 2020. Among the sub indexes, the supply index fell to the lowest level in 21 months for five consecutive days, the sales index fell to the lowest level since September for two consecutive days, and the inventory index stopped falling and rebounded to the highest level in nearly three months. Judging from the changes of data this month, there is an imbalance between supply and demand in the domestic commodity market, commodity inventories begin to backlog, and market downside risks begin to accumulate. In December, with the continuous decline of temperature and the increase of site shutdown in heating season, it is expected that the demand of domestic bulk commodity market will further shrink and commodity prices will further weaken.
1、 The supply of goods continued to decline
In November 2021, the commodity supply index fell 0.2 percentage points from the previous month to 99.0%. The index fell for five consecutive months, indicating that with the continuous fluctuation of commodity prices and the continuous promotion of production restriction policies in many provinces, commodity production profits fell, some commodity production was blocked, output decreased, and commodity supply continued to decline this month. From the perspective of major commodities, the overall commodity supply continued to decline this month, mainly due to the sharp decline of ferrous metals such as steel and iron ore, while the supply of other varieties increased to varying degrees.
1. Steel supply continued to decline
In November 2021, the steel supply decreased by 3.2% compared with the previous month, showing a downward trend for five consecutive months. From the market situation, near the end of the year, some enterprises that have not completed the production restriction index will vigorously reduce production to ensure compliance. On the other hand, due to the arrival of the heating season, some steel enterprises in the north are facing a new round of environmental protection production restriction. Affected by these factors, steel production continued to decline in November. In November, the PMI production index of the iron and steel industry was 33.5%, down 3.3 percentage points month on month, and remained in the contraction range for five consecutive months, the lowest in recent 21 months. According to the latest data of China Steel Association, the average daily crude steel output of key steel enterprises was 1.7628 million tons in mid November, down 2.04% month on month. According to Xiben information data, as of October 2021, the domestic monthly crude steel production has fallen sharply for five consecutive months. Under the normalization of nationwide production restriction and reduction, the crude steel output of most provinces and cities has decreased year-on-year in October. From the current supply situation, with the implementation of local reduction tasks, the horizontal control target of annual crude steel output proposed by the Ministry of industry and information technology at the beginning of the year can not only be completed in advance, but also the annual crude steel output is expected to decline by about 2% year-on-year. Considering the trend of low-carbon development of the iron and steel industry and the current situation that local production restrictions are becoming more stringent due to the upcoming winter Olympic Games, it is expected that the crude steel output will remain low in the later stage. It is worth noting that with the sharp correction of raw material prices, after the digestion of high price inventory in the early stage of steel mills, the dynamic profit has increased significantly, and the willingness of some steel mills to resume production has increased. Therefore, the positive expectation on the supply side may decrease next month.
2. The supply of iron ore decreased significantly
In November 2021, the iron ore supply decreased significantly by 3.8% compared with the previous month. After two months, the decline pattern reappeared, showing that the domestic output decreased and the recent month on month decline of Australia Pakistan shipment, the inbound volume also decreased significantly, and the domestic iron ore supply pressure was relieved. From the current market situation, the medium-term supply increment of ore is limited. The sharp decline in iron ore prices from July to November has fallen below the cost of some overseas high-cost mines. Before, the market successively reported the closure of some small and medium-sized mines. From the domestic iron ore import data, the year-on-year decline in September and October reached 11% and 15% respectively, while the non mainstream ore import decreased by 37% year-on-year for two consecutive months, and the proportion in the import volume also decreased to 14%, the lowest since February 2019, which also verified the conclusion that the current ore price level has begun to restrain the supply of non mainstream ore. In terms of mainstream mines, it can be seen from the published three quarterly reports of mainstream mines that there will be little increase in mainstream mines next year. Vale will reduce the crude of high silicon bar by about 4 million tons in the fourth quarter. If the current situation continues, it may reduce 12-15 million tons of low profit products in 2022. The output target of bhp2022 fiscal year is 249-259 million tons, and the actual output in 2021 fiscal year is 254 million tons; The output target of fmg2022 fiscal year is 180-185 million tons, and the actual output of 2021 fiscal year is 182 million tons. If calculated by the average output target, it is basically equivalent to the actual output of 2021 fiscal year. Therefore, in the medium term, under the current price level, the increment of ore supply is limited.
3. Coal supply maintained strong growth
In November 2021, the coal supply continued to increase, with an increase of 3.9% over the previous month, showing a growth momentum for four consecutive months. From the current market situation, in October, relevant departments began to substantially increase the supply of coal. In November, the supply of coal was further increased and the daily output of coal was further improved. According to the data of the National Bureau of statistics, in October, the total raw coal output was 357 million tons, with an average daily output of 11.52 million tons, an increase of 700000 tons compared with the average daily output in August and 380000 tons compared with the average daily output in September. In November, the daily output of raw coal exceeded 12 million tons, constantly breaking the historical record, and the daily average output was further increased compared with October, which well guaranteed the demand for supplementary storage of power coal in the power plant. Since November, the average daily coal supply of national unified dispatching power plants has reached 8.1 million tons, an increase of more than 30% over the same period last year. On November 24, the coal storage of the power plant reached 149 million tons, an increase of more than 40 million tons over the end of October, which can be used for 24 days. Although the power plant’s coal inventory has continued to rise since November, even more than the same period last year, to a certain extent, this is achieved by squeezing the coal demand of other industries, and the real peak of coal consumption in winter is coming. At the same time, the absolute coal price is still at a high level, and it is expected that the coal supply guarantee policy will not be easily withdrawn, Domestic coal supply will remain high in December.
2、 Increased pressure on commodity sales
In November 2021, the commodity sales index fell to 98.9% for two consecutive years, indicating the arrival of the off-season of market demand. From the change of the index, in November, the demand of domestic bulk commodity market decreased significantly affected by the weather, especially in the northern region, as the weather turned cold and entered the winter break period, outdoor construction was disturbed, in addition, the epidemic situation was repeated and some commodity prices fluctuated, the market panic increased, the procurement of terminal enterprises became more cautious, and the market ordering enthusiasm decreased significantly, The transaction was significantly weakened, and the order organization pressure of commodity production enterprises increased. Among the main commodities, except for the growth of raw coal and automobile sales, and the decline of sales growth, other varieties showed a downward trend in varying degrees. In December, affected by the weather, infrastructure and real estate construction will gradually stagnate, and the demand for bulk commodities will continue to tighten. The demand for automobiles and ships may be relatively stable, but on the whole, the market demand will run low. Especially at present, the investment in the real estate market has slowed down. Considering the guidance of national real estate policy, the core driving force of real estate will weaken in the future, and it is difficult to significantly improve the support for the whole commodity market. Therefore, the demand for commodities in the real estate market may decline in a trend in the long term.
1. The situation of insufficient demand for steel continues
In November 2021, the sales volume of iron and steel decreased by 1.7% compared with the previous month, showing a downward trend for two consecutive months, and the decline rate this month increased by 1.1 percentage points compared with the previous month. From the market situation, in November, the domestic steel market is approaching the traditional off-season of demand, and the gradual weakening of downstream procurement demand has become an indisputable fact. With the nationwide cooling down, the demand in the northern region has declined as a whole after entering the heating period, and the overall demand in the Southern region has also declined due to the slowdown of real estate investment demand. After December, the off-season characteristics will be more obvious, and the demand in the north will further decline; However, with the decline of steel prices, “winter storage demand” will surface, and steel mill policies will guide middlemen to hoard goods; Meanwhile, under the “sprint” effect at the end of the year, the demand in the southern market will still maintain a certain toughness. Therefore, we expect that the demand side will not fall precipitously in December.
2. Iron ore demand continues to be sluggish
In November 2021, the sales volume of iron ore decreased by 1.9% compared with the previous month, showing a downward pattern for seven consecutive months, but the decline rate this month narrowed by 1.7 percentage points compared with the previous month. From the market situation, under the influence of policies such as horizontal control and production restriction in heating season, the production of steel mills has been declining recently, which has led to the decline of raw material procurement activities and finished product inventory of steel mills, resulting in the continuous downturn of iron ore demand. In November, the PMI procurement volume index of the iron and steel industry was 32.0%, down 5.0 percentage points month on month, below 40% for four consecutive months, and the finished product inventory index was 28.6%, down 2.2 percentage points month on month. Looking forward to the future, the resumption of production of steel mills is expected to promote or bring some increment to iron ore sales. Since the end of last year, relevant leaders of the Ministry of industry and information technology have repeatedly said that the goal of no year-on-year increase in crude steel output in 2021 should be achieved. This multiplies the pressure on the steel plant. According to the data of the National Bureau of statistics, in the first half of this year, China’s crude steel output increased by 11.8% year-on-year, which is quite different from the target of no increase year-on-year. Since the second half of the year, the reduction of steel production has increased significantly. The latest data released by the National Bureau of statistics in mid November showed that from January to October, China’s crude steel output was about 877 million tons, a year-on-year decrease of 0.7%. This means that after four months of vigorous production reduction, the target of no year-on-year increase in crude steel production has been achieved, and the pressure on steel mills to reduce production has been greatly reduced. According to the calculation, the average daily output of crude steel in China in October was about 2.3 million tons. In the last two months, as long as the average daily output of crude steel does not exceed 3.07 million tons, the goal of no year-on-year increase in crude steel output in the whole year can be achieved. From 2.3 million tons to 3.07 million tons, it means that the output increases by 30% month on month, which means that there is a large space for the steel plant to resume production. The resumption of steel plant production means an increase in iron ore procurement, which will benefit the price of iron ore. However, expectations are expectations after all, and expectations must be verified by reality. The demand for iron ore completely depends on the production status of domestic blast furnaces. The utilization rate of national blast furnace capacity is an index reflecting the production status of domestic blast furnaces. The data show that at the end of November, the utilization rate of blast furnace capacity of 247 steel mills in China was 75.23%, the lowest in the year, down 3.6 percentage points from 78.83% at the end of October. In other words, although there is a large space for the steel plant to resume production in November and December, the steel plant did not actively resume production in November. On the contrary, it increased the intensity of production reduction. The space for resumption of production is only a necessary condition for resumption of production, not a sufficient condition. From the production scheduling plan of some steel mills, some steel mills are indeed ready to resume production in December. However, it should be reminded that there are variables in the successful implementation of the production scheduling plan, and the resumption of production of some steel mills is a local phenomenon after all. The extent to which it can affect the overall capacity utilization remains to be seen.
3. Coal demand remained strong, but the growth rate of consumption fell
In November 2021, coal sales increased by 2.6% over the previous month, showing a growth pattern for four consecutive months, but the sales growth rate this month decreased by 1.1 percentage points over the previous month. From the market situation, after entering November, the growth of thermal power generation and coal consumption slowed down due to the slowdown in the growth of power demand and the delay in fulfilling the previously expected cold winter. According to the data, as of November 25, the cumulative power generation of rekindled coal power plant in November increased by 6.1% year-on-year, and the cumulative coal consumption increased by 9.8% year-on-year. Compared with the growth rate in October, it decreased by nearly 8 percentage points and 9 percentage points respectively, and the consumption growth rate decreased. Looking forward to the future, the consumption of power coal has gradually entered the peak. However, due to the rapid recovery of power plant inventory, the purchase demand of power plant is expected to gradually weaken, and the consumption of coking coal is relatively weak. However, in the short term, the coking plant has the demand for replenishment of raw coal. In December, with the further decline of temperature, the demand for heating power will further pick up. At the same time, hydropower has entered the dry season, the hydropower generation will further decline, and the thermal power generation and coal consumption will continue to rise seasonally. However, since October, relevant departments have concentrated on ensuring the supply of coal, and the inventory of the power plant has rebounded to a relatively high level in the same period in history. When the coal supply continues to remain high and the coal price is still high, it is expected that the purchase demand of power coal in the power plant will gradually weaken in December. For coking coal, because the prices of coke and coking coal both fell rapidly and sharply in November, the raw coal of coke enterprises is in the state of active inventory reduction. At present, the inventory of coking coal of coke enterprises is at a low level. Due to the continuity of coking production, most local coal mines will stop production and have holidays during the Spring Festival. In order to ensure the normal supply of raw coal during the Spring Festival, coke enterprises need to appropriately increase the inventory of raw coal at the end of the year. In the short term, due to the weak demand for coke, there may be little room for the improvement of coke production and coking coal demand. However, due to the need for winter storage and replenishment, the purchase demand of coking coal by coke enterprises will increase.
4. The demand for non-ferrous metals weakened, but it is still expected to pick up marginally in the later stage
In November 2021, the sales volume of non-ferrous metals decreased by 1.3% compared with the previous month, and the decline pattern reappeared after four months, indicating that the off-season is coming and the market demand is weakened. However, we believe that the decline of sales volume this month is also related to the continuous increase in the previous base. Looking forward to the future, the automotive industry will pick up due to the easing of the tight chip supply pattern, the new energy automotive industry will continue to develop at a high speed, and the consumption of non-ferrous metals is expected to pick up marginally. At the same time, the recent price drop will also provide replenishment opportunities for terminal enterprises. In terms of automobiles, the data show that China’s automobile output in October was 2.3435 million, an increase of 158000 or 7.21% month on month, a year-on-year decrease of 8.30%. From January to October, the cumulative output of automobiles in China was 20.9171 million, with a year-on-year increase of 7.10%, and the cumulative year-on-year growth rate increased by 11.2 percentage points over last year. Although the year-on-year growth rate of China’s automobile production in the current month is still negative, it has been gradually improved month on month. In August, China’s automobile production decreased by 19.1% year-on-year, 13.7% in September and 8.3% in October. The year-on-year decline in production showed a slowing trend. Recently, the shortage of chip supply has eased, and the production of automobile enterprises has warmed up, which will be conducive to the recovery of non-ferrous metal demand. In terms of new energy industry, the production and sales of new energy vehicles still maintain rapid growth. According to the data released by China Automobile Industry Association, in October, the new energy vehicle market continued to perform well, the production and sales continued to grow month on month and year-on-year, and the production and sales reached another record high, reaching 397000 and 383000 vehicles respectively, with month on month growth of 12.5% and 7.2%, both 1.3 times year-on-year growth. From January to October, China’s cumulative output of new energy vehicles was 2.701 million, only about 13% of that of traditional vehicles. It is understood that a new energy vehicle needs about 140 kg of aluminum, which is higher than that of traditional vehicles. Although the volume of new energy vehicles is still small, with the support of policies, the rapid development trend of new energy vehicles is expected to continue, and the demand for non-ferrous metals in this regard will continue to grow. In terms of the seasonality of production in the air conditioning industry, the second peak of air conditioning production in the year will be ushered in from October to the end of the year, and the production rhythm has little correlation with the industry inventory. At present, the inventory of domestic household air conditioners is more than 16.65 million units. Although the inventory pressure is relatively large, it is difficult to break the normal accelerated production rhythm of the industry. Therefore, the demand of the air conditioning industry will be significantly improved in December. If the end consumption is repaired, orders for copper and aluminum will increase, but the previous price is relatively strong and the enterprise has insufficient power to replenish the stock. This price correction has created a good opportunity for the enterprise to replenish the stock. The speed of local government special debt allocation was accelerated, the orders of State Grid were delivered centrally at the end of the year, and the orders of cable enterprises increased; Cable orders in the new energy industry have increased steadily, with a significant increase in submarine power cables. The strengthening of environmental protection control in Henan and Hebei affected the production of some enterprises in the region. However, the current demand is generally good, the orders of downstream mainframe manufacturers have increased, and enterprises in other regions have started well. The recovery of consumption of transformers, integrated circuit semiconductors and new energy vehicles led to an increase in non-ferrous metal demand, and market orders increased steadily. Due to the strong price performance of non-ferrous metals, the power of raw material replenishment of processing enterprises is insufficient. With the recent decline in prices, the power of enterprises to replenish the stock has gradually returned.
3、 Commodity inventory starts to accumulate
In November 2021, after three consecutive declines before the end of the commodity inventory index, the commodity inventory index rebounded to the bottom, 100.4%. The index rebounded by 1.3 percentage points compared with the previous month, the highest point in recent three months, indicating that with the weakening of terminal demand, commodity inventory began to backlog and inventory pressure increased. From the inventory of major commodities, except for the decline of steel inventory this month, other varieties showed an increasing trend.
1. Steel inventories continued to decline
In November 2021, the steel inventory continued to decline, decreasing by 3.3% compared with the previous month, showing a downward trend for three consecutive months. From the perspective of market conditions, the basic situation of the industry in November showed a weak pattern of supply and demand. Among them, due to the opening of production restriction in the heating season and the superposition of the sharp decline in steel prices, some steel mills took the initiative to reduce production and the supply side remained low; Under the influence of off-season factors, the performance of the demand side is poor, and the demand of the north and South markets is obviously differentiated; Overall, the contraction of the supply side is greater than the cooling of the demand side, so the domestic steel inventory continues to decline. According to the inventory monitoring data of Xiben information, as of November 25, the total inventory of major steel varieties in China was 10.3954 million tons, a decrease of 1.406 million tons or 11.9% compared with the end of October, an increase of 409100 tons or 4.09% compared with the same period last year. The inventories of thread, wire rod, hot rolling, cold rolling and medium plate were 4455300 tons, 1302600 tons, 2374400 tons, 1225500 tons and 1037600 tons respectively. The inventory of major domestic steel varieties decreased this month, among which the inventory of rebar decreased the most. After entering December, under the year-end sprint effect, the demand side is expected to maintain a certain intensity. At the same time, there will be no significant growth at the supply side, and the supply and demand structure will be repaired to some extent. It is expected that the domestic steel inventory will be difficult to recover significantly.
2. Supply increased and coal inventory continued to grow
In November 2021, the coal inventory increased by 3.1% compared with the previous month, and the growth rate increased by 1.3 percentage points compared with the previous month, indicating that the guaranteed supply has rapidly improved the national coal supply level, and the inventory of ports around the Bohai Sea has further accumulated, which is close to the high level in the same period of 19 years. Recently, the Datong Qinhuangdao railway has maintained a nearly full capacity, with an average daily coal transportation of nearly 1.3 million tons, and the unloading efficiency of ports along the line has increased significantly; However, the heavy fog and strong wind in each port successively blocked the navigation, resulting in the anchoring of port loading and unloading equipment, limited coal transfer, significantly reduced transfer out and continued upward inventory. At present, 25.48 million tons of coal are stored in the ports around the Bohai Sea, which has exceeded the level of the same period last year; Among them, the coal storage in Huanghua port is on the high side, exceeding the normal level. The inventory of SDIC Caofeidian, SDIC Jingtang and Jingtang Port 36-40# terminals are close to the normal level, while the coal storage in other Qinhuangdao port, Caofeidian Huadian and Jingtang old port is at the median level. After the weather turns sunny, it is expected that the inventory of ports around the Bohai Sea will continue to grow.
3. Car inventories continued to rise
In November 2021, the automobile inventory increased by 1.9% over the previous month, showing a growth momentum for two consecutive months, indicating that with the continuous alleviation of chip problems, the tight automobile supply has been significantly improved, but the demand side failed to make significant efforts, resulting in the continuous accumulation of market inventory. According to the latest issue of “inventory early warning index survey of Chinese auto dealers” via (vehicle inventory alertindex) released by China Automobile Circulation Association, the inventory early warning index of auto dealers in November 2021 was 55.4%, a year-on-year decrease of 5.1 percentage points and a month on month increase of 2.9 percentage points. The inventory early warning index is above the boom and bust line. From the market situation, the chip problem has been alleviated recently, and the tight supply of cars has been significantly improved. However, the escalation of epidemic prevention and control in various places has restrained the release of market demand. “Double 11” car purchase activities, Guangzhou auto show, new car listing and other factors all bring the heat of the motor car market. In addition, there are certain business policies for impulse at the end of the year. The sales volume is slightly higher than that in October, but the year-on-year decline is serious. Near the end of the year, chip supply gradually eased, but the annual sales gap is difficult to make up. Factors such as the advance of the Spring Festival and the expiration of the year-end consumption promotion policy are conducive to the release of year-end consumption demand, but the momentum of dealers at the end of the year is still weak. Most dealers are unable to complete their tasks and objectives and transfer part of their demand to 2022. It is expected that the sales volume in December will rise slightly compared with that in November, but the market inventory will continue to increase as the supply problem continues to ease.
Overall, in November, the off-season characteristics of the domestic bulk commodity market appeared, the terminal demand fell seasonally, the market supply and demand was unbalanced, the inventory continued to accumulate, and the commodity price fell as a whole. In December, the decline of demand in the off-season will continue. Although the overall commodity production has entered the decline channel, there is still a certain possibility of resumption of production in the later stage, and the contradiction between market supply and demand will be further deepened. At present, the domestic macroeconomic operation is stabilizing, and the short-term market sentiment is optimistic, but the downward pressure on the domestic manufacturing industry can not be ignored. In addition, the U.S. inflation concern will continue, and the impact of the new mutant strain Omicron on the market still needs time to digest. Overall, the downside risk in the later market is continuously accumulating, and the focus of commodity prices is expected to move further downward.
1. The downward pressure on the manufacturing industry can not be ignored
The purchasing manager index (PMI) of China’s manufacturing industry in November 2021 released by China Federation of logistics and procurement and the service industry survey center of the National Bureau of statistics was 50.1%, up 0.9 percentage points from the previous month, and returned to the expansion range after operating below 50% for two consecutive months, indicating that the economy has stabilized after two consecutive months of correction. The change of sub indexes shows that the sub indexes and industry indexes generally rebounded in November, and the recovery range is obvious, indicating that there are many positive changes in the economy. The effect of the policy of ensuring supply and stabilizing price implemented in the early stage is obvious. Since this year, the growth rate of raw material prices, which have been running at a high level, has slowed down significantly this month, driving the sales price to decline. The production and procurement activities of enterprises picked up rapidly, and the willingness to stock up and replenish stocks was strengthened. The industrial chain and supply chain have recovered well, and the business situation of small and medium-sized enterprises is improving. Compared with the rapid recovery at the production end, the demand end is still relatively weak, and the quality of economic recovery needs to be strengthened. In November, the new order index increased by 0.6 percentage points to 49.4% compared with the previous month. Although it rebounded, it was still below 50%. The index level and recovery range were significantly lower than the production index. Moreover, new export orders increased by 1.9 percentage points to 48.5% compared with the previous month, and the finished product inventory index increased by 1.6 percentage points to 47.9% compared with the previous month, indicating that the improvement of foreign demand in November is an important driving force for the overall stable recovery of market demand, but the release of domestic demand is insufficient, and the finished product inventory of enterprises has increased. According to the enterprise survey, the proportion of enterprises reflecting insufficient market demand increased by 4 percentage points to 37.6% compared with the previous month. In combination, the current pressure of oversupply has increased, and the quality of economic recovery needs to be strengthened. We still need to take multiple measures to expand demand and stabilize the endogenous driving force of the economy. In addition, the index rebounded this month. The author believes that there are certain low base and cyclical factors, and the downward pressure on the manufacturing industry in the later stage can not be ignored.
2. The Fed’s tightening pace is expected to accelerate
On November 22, US President Biden announced the nomination of Jerome Powell for re-election as chairman of the Federal Reserve and Lyle Brenner as vice chairman of the board of Governors of the Federal Reserve System. Powell’s re-election nomination means that the current Fed policy will continue. At present, the market still expects that the Federal Reserve is expected to start raising interest rates after the end of the table contraction in June next year. After Biden’s nomination announcement, Powell commented and acknowledged that “high inflation impacts families” and that the Federal Reserve will use all available tools to “prevent rising inflation from becoming entrenched”. As inflation is much higher than expected, the market expects that the Federal Reserve will announce the expansion of the scale reduction in December. At present, the scale reduction is only $15 billion, which means that the monthly net purchase of treasury bonds and MBS is still $105 billion. From the interest rate market, the yield of two-year US bonds sensitive to interest rate hike hit a new high since March last year, while the yield of 10-year US bonds broke 1.6% again.
3. Watch out for upward pressure on the US dollar index
After the Federal Reserve officially announced taper in November, the expectation of peak liquidity fell, and the liquidity premium in this round of non-ferrous metal trend rise faces the risk of crowding out. In October, the CPI of the United States increased by 6.2% year-on-year, the largest growth rate since 1990. The pressure of inflation strengthened the expectation of tightening. At the same time, the outbreak of the European epidemic triggered a significant strengthening of the US dollar against the euro, and the US dollar index rose to the first line of 96 from around 94. Recently, US Federal Reserve Chairman Powell decided to be re elected. Compared with the other two candidates, Powell’s attitude towards monetary policy is more hawkish. After re-election, the US dollar index rises again. If the employment data this month remains good, it is expected that the market will further tighten the expectation of trading. In the short term, under the supply disturbance, the dollar factor has not been fully traded by the market, but the negative risk is gradually accumulating, so we should be vigilant against the upward pressure of the dollar index on commodity prices.
4. The new crown variant triggered a panic sell-off
The new mutant strain Omicron exacerbated the risk aversion of the market, and the prices of risky assets generally fell. The mutant strain was first found in bozvana, southern Africa on November 11, then spread rapidly in South Africa, and became the main infected strain in South Africa in a very short time. Compared with the previous variant strains, Omicron has higher infectivity, resulting in a surge of confirmed cases. The market is worried that the mutant virus may promote the outbreak of a new wave of epidemic, and then impact the consumer and financial markets, and the price of risky assets generally fell. However, we believe that the market may overreact, the mortality rate of Omicron is not high, and the global preventive measures against Omicron may be stronger and stronger. The research of South African health experts shows that although Omicron spreads rapidly, the symptoms caused by Omicron are mild, and the hospitalization rate has not really increased. In order to prevent the Omicron invasion, Israel announced that it would close its borders. The United States, Britain, Germany and other countries have announced travel restrictions from South Africa and other African countries. From the perspective of vaccine, large biopharmaceutical companies have begun to carry out vaccine research and development for new mutants, and the response is relatively rapid.
5. Weak demand suppresses domestic commodity prices
The sharp decline of the real estate industry, coupled with the heavy blow of the national development and Reform Commission on coal prices, has become the main reason for the sharp decline in commodity prices after the national day. With the exposure and deterioration of the industry’s credit risk, the regulatory policy began to pick up marginally. The national development and Reform Commission and the central bank mentioned the real estate risk for many times, gave expected guidance to financial institutions for many times, and appropriately relaxed the restrictions on real estate financing. Institutions generally expect that the policy bottom of the real estate market has appeared, but the policy bottom is still far from the market bottom. There is inertia in the decline of real estate sales. It is difficult to see significant improvement during the year. The weak real estate cycle will put pressure on the overall industrial metal. Real estate involves many industries in the upper, middle and lower reaches, such as building materials in the upper reaches (including steel, aluminum and glass), automobiles, household appliances and sanitary ware in the lower reaches, as well as supporting industries such as power, gas, greening and decoration, which have a great impact on China’s economy. In addition, the investment demand of commodities is affected by credit creation, that is, the monetary factor is imposed on the pricing of commodities through the financial attributes of commodities. Data show that real estate is the main way of credit creation in the past 10 years. It is estimated that in 2010, the total credit created by real estate was about 12.6 trillion yuan (increment), rising to 36.1 trillion yuan (increment) by 2020, accounting for 35.5% of the nominal GDP of that year. In addition, the growth rate of social finance continues to decline. After the arrival of winter, some projects in the north are gradually shut down. The cashing of wide credit and the development of infrastructure may have to wait until next year. The global automobile is still subject to the pressure of lack of core. Although the operating rate of semi steel tire and automobile production have a seasonal recovery, the overall level is still lower than that in the same period of previous years, and the seasonal boost of automobile demand is limited. Against the backdrop of weakening in major consumer areas, it is expected that there will be no significant room for commodity inventories to fall, and the market’s trading of weak demand logic will suppress the rising space of commodity prices.
Author: Li Dawei, China Logistics Information Center. Read more: China Federation of logistics and procurement: China road logistics freight rate index fell slightly in April 2017. China Federation of logistics and procurement: China Express Logistics index was 106.3% in December 2017. China Federation of logistics and procurement: China logistics industry prosperity index was 54.3% in September 2017. China Federation of logistics and procurement: November 2021 Operation of China purchasing manager index in June China Federation of logistics and purchasing: investigation report on production and business environment of logistics and supply chain enterprises returning to work in 2020 (download attached) China Federation of logistics and purchasing: in Q1 2013, the total social logistics in China was 43.3 trillion yuan, an increase of 9.4%. China Federation of logistics and purchasing: the prosperity index of China’s logistics industry in April 2017 was 58.2% CFLP: China’s non manufacturing business activity index (PMI) in September 2011 China Federation of logistics and procurement: the average monthly income of 74.6% of couriers is between 3001 yuan and 5000 yuan. China Federation of logistics and procurement: China e-commerce logistics will continue to maintain rapid growth in 2017. China Federation of logistics and procurement: in 2013, China’s express service enterprises completed 9.2 billion business units. China Federation of logistics and procurement: in 2013, China’s express business volume was 9.2 billion China Federation of logistics and procurement: the number of logistics employees in China in 2016 was 10.08 million, with a year-on-year increase of 4.7%. China Federation of logistics and procurement: 2018-2019 China blockchain + industrial supply chain application development report (download attached) China Federation of logistics and procurement: logistics operation data from January to April 2020
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