Since the beginning of this year, the commodity market has fluctuated downward. By the end of June, the prices of steel, coal, natural rubber, electrolytic copper, plastics, etc. all fell by more than 10, and some reached or exceeded 20%. Among them, the national steel price index (the Lange steel net market monitoring data) fell by more than 7 from the beginning of the year, and the Shanghai rebar main contract price once broke through the 3,400 yuan / ton mark. Affected by this, the sales price index of the national production materials in the first half of the year fell by about 5 year-on-year, and the profits of enterprises have shrunk sharply, which has greatly dragged down the stock market.
It is expected that the downward pressure on the commodity market will still exist, and it will run weakly in a short period of time, and it is not possible to rule out the possibility of exploring new lows. The author believes that the current market pressure on commodity markets mainly comes from three aspects:
First, the domestic economy continues to slow down.
Statistics show that the national GDP growth rate in the first quarter of this year was only 7.7, weaker than expected, and it was in a downward trend for several consecutive quarters. If we consider that there is some hot money in the export data, the actual economic growth rate may be lower. After entering the second quarter, the final value of HSBC China's manufacturing PMI fell to 48.3 in June, which was below the glory line and reached the lowest level in 9 months. The national electricity consumption and coal production were also not satisfactory. The monthly thermal power generation growth rate is only 2.1, indicating that the Chinese economy will further slow down; the rapid appreciation of the renminbi will cause a great impact on foreign trade exports. In May this year, the country’s exports only increased by 1, the PPI decreased, the credit scale contracted, and the stock market fell sharply. This has led to a continued slowdown in the future economy, including hard landing concerns. Affected by this, the International Monetary Fund (IMF) lowered China's economic growth forecast, from the previous 8 to 7.75; international investment banks also collectively sing China; domestic investors, consumers, producers are also generally pessimistic about the demand outlook, Be short and have a strong atmosphere.
Second, the appreciation of the renminbi brought triple pressure.
In the previous period, a wave of global interest rate cuts over a wave of waves, highlighting China's ultra-high interest rates, attracted a large number of arbitrage hot money swarming in, pushing the RMB exchange rate to rise strongly. By the beginning of June, the central parity of the RMB against the US dollar had reached 6.16, and the cumulative appreciation was close to 1,200 basis points, almost eight times the value of last year's appreciation. Although the current hot money has begun to withdraw from China, the exchange rate of the RMB against the US dollar will shift from rising to falling, but there is limited room for the fall in the second half of the year. The RMB exchange rate has remained relatively high, which has increased the downward pressure on commodity prices from three aspects. The first is to deal a heavy blow to China's export trade and correspondingly reduce the demand for raw materials in the manufacturing industry. Secondly, it reduces the cost of overseas imports and provides space for domestic sales prices to fall. Finally, the internal and external spreads stimulate a large increase in imports, further exacerbating domestic oversupply.
Third, the Fed has withdrawn from QE to go to financial pressure.
Recent market rumors that the Fed is about to withdraw from quantitative easing (QE). Some economists abroad said that the Fed may begin to reduce the size of its bond purchases as early as September. Although the Fed has no doubt about whether it will withdraw from QE and when it will withdraw, its exit expectations have put a lot of pressure on commodity markets and capital markets. This is because, after the financial crisis in 2008, under the weak demand of the real economy, the commodity prices in the international market still rebounded strongly and operated at a high level. This is because the world countries are competing to release liquidity, and the Fed has injected 4 times of QE into the market. Sexuality exceeds $2 trillion, which creates a great fear of serious inflation in the future, and the consequent commodity hoarding and speculative demand, the so-called financial demand expansion. If the Fed really decides to withdraw from QE in the next few months, it will inevitably lead to de-financialization and squeeze the financial property premium of commodities. Affected by this, in the short period of time, global oil, ore, metal, rubber and other commodity prices will have a round of decline.
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