Bulk Commodity Stands At Historical High, Steel Enterprises Look Forward To Cooling Inflection Point

Futures market black series of soaring heart numb, after reaching a record high, a correction has become the general trend, but no one knows when the turning point will appear.

Commodities continue to go crazy

After May Day, commodity prices continued to rise fiercely, "coal flying dance" became the main theme of the market.

On May 10, the domestic futures market met the general rise again, with Shanghai copper, iron ore, glass, coking coal, rebar, hot coil and other varieties went up and down one after another, and it was hard to find signs of cooling of bulk commodities standing at the historical high.

Specifically, the iron ore futures contracts of the domestic large trading exchanges were closed at 1326 yuan / ton in the early trading, which was the highest value in history, with an increase of more than 20% compared with the end of April; Among them, Shanghai copper broke through the 77000 yuan mark and closed at 77720 yuan / ton, a 16 year high; Luntong rose by more than 2% in a single day, reaching a high of 10757.50 US dollars / ton; Shanghai aluminum closed at 20420 yuan / ton, a 13 year high.

The main contract of domestic screw futures received 6012 yuan / ton, a new record high; After May 8, the hot-rolled coil set a new record of 6335 yuan / ton.

In terms of spot, the domestic steel market is still fierce. According to the monitoring data of Lange Steel's cloud business platform, on May 10, the daily growth of domestic grade-3 rebar reached 389 yuan / ton, and that of hot-rolled coil reached 369 yuan / ton. In the peripheral market, the prices of hot-rolled coils in the Midwest steel mills of the United States, the European Union steel mills and the Japanese market all increased by more than $10 / T.

The collective price rise of bulk commodities is causing a severe impact on the manufacturing industry, and continues to squeeze the profit space of downstream industries. What is the reason for the above expected increase?

The collective rise in commodity prices has had a severe impact on the manufacturing industry. IC photo

Supply and demand mismatch or pure speculation?

China is the world's largest steel producer, accounting for more than half of the world's iron ore consumption, and its external dependence is about 80%; China is the world's largest copper consumer, but its domestic copper resources are difficult to meet domestic demand, and the degree of dependence on copper is more than 70%.

In view of the continuous rise of commodity prices, many insiders told reporters of the 21st century economic report that the first quarter data showed that the overall domestic market demand was not too strong; Although the mismatch between supply and demand and the abundant liquidity have caused the price of bulk commodities to continue to rise, the current price level has obviously left the supply and demand fundamentals, which means that the value maintenance and speculation are strong.

In terms of steel market, under the background of carbon neutralization and carbon peak, and with the introduction of steel capacity replacement and other policies, the national development and Reform Commission issued a notice on May 10 to "look back" inspection of steel production capacity in 2021. A series of factors continued to strengthen the market's rising expectation and stimulate the pull-up sentiment at the supply side.

Lange Iron and steel network analysis pointed out that in the fear of heights of all parties in the market, the steel market has reached the crazy stage, the basic factors have partially failed, the mood has become the dominant factor, and the market trend is unpredictable. From the specific capacity data, at present, the national steel production is not significantly tight, high steel prices also inhibit the release of downstream demand, and the social inventory of steel is changing from decline to increase.

Wang Siya, senior analyst of Lange Iron and steel network, told reporters of the 21st century economic report that the current market supply is tight and the situation of strong demand has not changed significantly. From the perspective of domestic spot market fundamentals, the market inventory is large, but most of the goods are in the hands of large customers and steel mills; For steel mills, orders are sufficient, inventory is steadily declining, and fundamentals are also good for steel prices. In the case of continuous rising costs, it is unlikely to take the initiative to reduce the ex factory price of steel.

Copper is one of the barometers of macro-economy and bulk commodities. Against the background of global inflation, the continuous growth of global demand side, and the recovery of overseas supply is less than expected, and the production of mining areas in South America is expected to be hindered, all of which have provided strong fundamental support for copper prices.

In the spot copper market, Zhuo Chuang information analysis points out that at present, the range of price increase and discount in the market is obviously narrowed, and even there are flat transactions, which indicates that the market is more bullish and chooses to prepare goods in advance; The green economy view put forward by the climate summit ignited investors' speculation enthusiasm for copper demand expectations, and promoted copper prices to rise again.

In terms of iron ore, domestic steel demand has fallen slightly since the end of last year. However, stimulated by the growth of overseas demand, the profit per ton of steel of steel enterprises has increased, the enthusiasm for production is high, and the price of iron ore is high. Compared with the price level in 2020, iron ore has nearly doubled, with strong speculation.

When does the inflection point appear?

At present, the global economic recovery and currency liquidity are at a high point. The monetary easing policy has basically entered the second half of the year. Emerging countries have raised interest rates one after another, and the action margin in overseas markets has weakened; Commodities are standing at a record high, and the price correction is inevitable. However, no one can be sure when the inflection point will appear.

On the evening of May 10, the SSE decided to adjust the trading margin standard, the limit range of up and down limit, and the transaction fee standard of the power coal futures contract; During the same period, the exchange also adjusted the handling charges for the trade of rebar and hot-rolled coil within a day.

Wang Siya said that at present, in addition to the impact of the epidemic, the supply of four overseas iron ore mines showed signs of increasing, but judging from the current data, the expected increase has not been realized. Considering that the arrival period of iron ore is about 15-50 days, even if the normal supply is gradually restored, it is expected that the pressure on the arrival of iron ore in the third quarter will begin to show.

Therefore, iron ore prices are expected to rise and fall in the future, but considering the demand and delivery cycle, the decline is limited at present.

For the steel market, the unilateral high steel price has affected the market acceptance. In the short term, there is still upward space for steel price, but the accelerated price rise will lead to the gradual contraction of downstream demand and market transactions, and the market will inevitably usher in adjustment after reaching the extreme.

In terms of copper futures, Zhang Wei, an analyst with Zhuo Chuang information, told reporters in the 21st century economic report that although the new US infrastructure policy, the upsurge of charging pile development, and the hot development expectations of photovoltaic and green economy industries have all driven up the copper price, as a long-term plan, its short-term real increase in copper price is also limited. With the slow recovery of copper supply, China's copper futures market is still in the early stage, The mismatch between supply and demand will also be eased.

Zhang Wei said that as the world reduces the scale of bond investment and increases interest rates in the future, the decline of commodity prices will become inevitable; But under the influence of the current market hype, when the turning point will appear is still unknown.