Since April, the price index of South China's industrial products has risen significantly. What is the economic logic behind the price rise of different commodities and what are the "recovery" signals?
First question: Recent price trend of industrial products? Copper, aluminum and iron have driven the recovery of metal price index. Among energy and chemical commodities, styrene has the largest increase. Recently, the price index of industrial products in South China has risen significantly, and both metal and energy and chemical indexes have increased significantly. Since February, the industrial product index of South China has continuously increased year on year, and the increase in May has expanded to 19.4%; During the period, the year-on-year decline of PPI was correspondingly narrowed. From the perspective of split structure, the metal and energy and chemical indexes both rose to a certain extent, and the year-on-year growth in May further widened; The growth rate of revenue in metal, petrochemical processing and other industries has also improved, pointing to the demand side support for the recent recovery of industrial product prices.
In the metal index, the rising prices of copper and aluminum boosted the non-ferrous index, while the rebound of iron ore prices led to the rise of the black index. In May, the growth of South China Nonferrous Metals Index expanded to 16.9%; Among them, the price of copper and aluminum has a large increase and weight, which is the main contribution to the rise of the nonferrous metal index. The South China Black Index rose to 14.7% year on year, with iron ore weighing up to 40%. At the same time, prices have rebounded significantly since April, which is the main reason for the rise of the Black Index.
Among the energy and chemical commodities, styrene has the highest price increase and the strongest sustainability; The prices of soda ash and glass, which were adjusted more in the early stage, have rebounded since April. The price of styrene has entered the upward channel since December last year, and the price rise is the most sustainable. On May 20 this year, the styrene index of South China hit a record high. In addition, the recent rise in South China's energy and chemical index is also related to the repair of soda ash and glass prices; In the first quarter of this year, the prices of soda ash and glass were significantly adjusted. Since April, the prices have rebounded continuously.
Second question: What economic factors support the price rise? The US replenishment has led to the recovery of foreign demand. Domestic power investment and equipment upgrading demand have heated up. The "resonance" between the US and China inventory and the growth of domestic power investment have jointly supported the prices of copper, aluminum and other non-ferrous metals. Metal products are one of the representative industries that resonate with the inventory of China and the United States. Since the beginning of the year, the growth rate of China's exports of metal products to the United States has improved significantly. The high increase of domestic power investment drives the demand for non-ferrous metals, wires and cables and other inputs. Since May, the copper, wire and cable indexes of Nanhua have increased by 21.6% and 2.5% respectively year on year compared with the end of last year.
The upgrading of domestic equipment and the growth of ship exports boosted the demand for steel, driving up the price of the black chain. A new round of equipment renewal has been accelerated. Automobiles, general equipment, etc. are the main "producers". At the same time, the global ship renewal superimposes China's comparative advantages in shipbuilding, which has significantly driven the export and production of Chinese ships. The production links of the above industries have a high demand for steel. In May, the output of cold rolling and medium and heavy plates was 2.8% and 5.4%, respectively, year-on-year, driving the iron ore index up.
With the contribution of countries along the "Belt and Road", China's household appliance exports continued to improve, and the demand for styrene increased accordingly. Home appliance manufacturing is one of the important application fields of styrene. This round of styrene price rise is mainly driven by the growth of home appliance exports; In April, the export volume of household appliances rose to 12.6% year on year. In recent years, China's export share of household appliances to Russia, Saudi Arabia, the United Arab Emirates and other countries has increased. From January to April this year, China's export of electromechanical equipment to corresponding regions has maintained a rapid growth.
Supply disturbance and global semiconductor sales rebounded, and tin and manganese silicon prices rose significantly. China has a high dependence on the import of tin and manganese silicon. Recently, the wharf on Grute Island in Australia was damaged and about 15% of the world's manganese ore shipments were blocked; In addition, the main production area of Myanmar tin mine, which accounts for nearly 70% of China's overseas imports, stopped production, significantly increasing the supply side disturbance.
On the demand side, the boom of global consumer electronics and the expansion of domestic integrated circuit production have also supported the prices of tin, manganese silicon and other raw materials.
Third question: the "recovery" signal behind the price rise? The improvement of exports may continue, and the effect of policy implementation on economic support may further show the recovery of the global manufacturing industry. The improvement of China's exports may continue. Since May, the growth of high-frequency data such as the CCFI index has expanded. Replenishment of some industries in the United States has started. On the one hand, it directly drives China's exports, on the other hand, it boosts the global manufacturing industry and forms indirect support for China's exports. Since May, the high-frequency data mapping external demand has shown positive changes. The year-on-year growth of CCFI index has expanded to 29.5%, and the port cargo throughput is significantly higher than that of the same period last year.
The domestic "equipment renewal" and real estate related policies have achieved initial results, and the economic support effect may be further manifested. In April, the growth rate of investment in equipment, tools and mining industry expanded to 17.2% and 21.3% respectively, and the demand for equipment renewal may have been released. The "white list" of early real estate financing also had some effect. In April, the new construction of real estate and the growth rate of construction area improved. With the "three arrows" of the property stabilization policy and the gradual improvement of the pace of financial bond issuance, the slope of domestic demand may continue to rise.
In addition, with the energy transformation and the accelerated layout of "new quality productivity", China's power infrastructure investment still has room for growth. China's new energy transformation led to a significant increase in power investment. In the first quarter, the grid connected PV power generation increased by 36% year on year. In April, the growth rate of investment in electric heating rose to 26.2%. In the future, there is still room for growth in power investment. On the one hand, there is a certain supply gap in charging infrastructure; on the other hand, the development of computing power and high-end manufacturing also have higher requirements on grid load.
Risk warning
The economic recovery was less than expected, and the effect of policy implementation was less than expected.
