Introduction to this report
The short-term adjustment of commodities is mainly affected by the demand impact of the revision of global growth expectations, the continued hawk bias of European and American central banks and the rise of risk aversion. However, with the strong support of supply logic, it is expected that commodities will still rebound to a high level after the third quarter.
Summary:
There are three reasons for the adjustment in the global commodity market.
1) major economies are facing demand shocks one after another. In April, the IMF lowered the global economic growth rate to 3.6%, down 0.8 percentage points from the January outlook. This means that the global economy will slow down rapidly from 6.1% in 2021. Previously, we have reduced the economic growth of the United States and China respectively. In Europe, even without considering the impact of insufficient energy supply, the current high price of energy has seriously impacted the consumption confidence of European residents and the production costs of enterprises, dragging down the growth of European economy. The typical representative is Germany, whose government economic advisory committee has lowered its growth forecast for 2022 from 4.6% to 1.8%.
2) the central banks of Europe and the United States continued to take a hawkish stance, aggravating liquidity concerns. At present, the global economic growth is weakening and the uncertainty is increasing, which requires the policy coordination of the global central banks. However, in the face of the current fragile recovery of emerging economies and even the debt crisis in some countries such as Sri Lanka, the US and European central banks are still determined to raise interest rates and exacerbate liquidity concerns.
3) risk aversion is rising, and the US dollar index is strong. With the gradual weakening of fundamentals and the continued hawkish pattern of the Federal Reserve, superimposed with the current geopolitical conflicts and the fragility of the political pattern, the risk appetite of the financial market continues to be compressed. According to refinitiv Lipper data, there was a significant outflow of US equity funds in the week ended April 20. The US dollar index continued to rise after breaking the 100 mark under the demand for hedging. Commodity prices have been adjusted in the short term due to the impact of risk aversion.
The supply logic remains intact, and commodities are still expected to be strong.
1) we have always stressed that the main logic of the current commodity market is that under the constraints of global carbon neutrality policy, global commodities face supply constraints. We emphasized this view in the September 2021 report "viewing the commodity pattern under carbon neutralization from the perspective of energy consumption control". After the conflict between Russia and Ukraine, the logic of supply constraints was further strengthened. In addition to the substantial reduction in the supply of important resources in Russia and Ukraine, the global economic and trade order has been impacted, and the trend of anti globalization has further intensified.
2) the supply and demand structure of representative varieties is still tight, supporting the subsequent market of bulk commodities. In the field of crude oil, in the short term, the United States urgently released strategic oil reserves to stabilize the market. However, from the perspective of surplus capacity, under the extreme circumstances, all Russian capacity withdrew from the market, all surplus capacity was fully opened, and there was still a supply gap of more than 4 million barrels / day to maintain the current output. In the field of industrial metals, referring to the calculation data of IEA, under the demand driven and supply constraints of carbon neutralization policy, there will be a huge gap between supply and demand of related metals In terms of Shenzhen Agricultural Products Group Co.Ltd(000061) risk, we previously released the report "global Shenzhen Agricultural Products Group Co.Ltd(000061) crisis warming", which emphasized the global Shenzhen Agricultural Products Group Co.Ltd(000061) risk warming under the influence of climate, oil price, war, epidemic and other factors.
The U.S. economy will remain relatively resilient during the recession.
Driven by service consumption and private capital expenditure, the GDP of the United States will rebound significantly in the second quarter, which is expected to be higher than 3%, which is the annual high. The economic momentum will fall in the second half of the year, but there is less risk of a "hard landing" in the year. Although the risk of the US economy falling into recession is indeed increasing under the background of the Fed's interest rate hike and the conflict between Russia and Ukraine, the risk of recession is still low because the balance sheets of residents and enterprises are still healthy, the labor market is still very strong, and the evolution path is: repairing the tail after the epidemic - stagflation like - soft landing. There is still some support for bulk demand.
