Investment research Daily: macro

Summary and Prospect of commodity market

There are still many macro variables, and we are concerned about the sustainability of the commodity rebound

On Friday (January 14), China’s commodity futures market closed mixed. Shenzhen Agricultural Products Group Co.Ltd(000061) was mixed, with red jujube up more than 5%, early indica rice and apple up more than 1%, eggs down nearly 2%, and rapeseed meal and vegetable oil down more than 1%; Most energy chemicals rose, with glass up more than 4%, methanol up more than 3% and ethylene glycol up nearly 3%; Most of the black series fell, with coke down more than 3%, wire rod down nearly 3% and coking coal down more than 2%; Most base metals fell, with Shanghai nickel up more than 2% and Shanghai lead up nearly 2%; Precious metals all rose.

Hot comments: since the beginning of 2022, bulk commodities have rebounded significantly. The main reasons are: first, the overseas economic recovery is still strong; second, China’s steady growth policy continues to work; third, the rapid spread of Omicron mutation virus around the world has brought new disturbances to the supply chain; fourth, the energy problem is fermented again due to geopolitical factors. In the short term, the tight supply and demand pattern is expected to continue to support the rebound in commodity prices. However, from a long-term perspective, global demand will further decline with the withdrawal of large-scale stimulus policies, and the problem of insufficient supply will gradually improve with the easing of the epidemic. Under the pressure of high inflation, the Federal Reserve will accelerate the tightening of monetary policy, and the space for commodity rebound may be limited. Focus on the upcoming December economic data, the continuation of the central bank’s MLF and the Federal Reserve’s interest rate meeting.

1. Black building materials: supply and demand are weak, and the trend of steel may be repeated.

According to the inventory data of several caliber such as Mysteel last week, the steel output continued to rise slightly, the factory and warehouse continued to be de centralized, and the society accumulated slightly, showing the signs of inventory transfer from steel mills to social warehouses. The table needs to be improved. The total inventory accumulation is lower than that of last week, and the steel still maintains the pattern of weak supply and demand. In the future, based on the expectation of the improvement of infrastructure investment after the spring, the winter storage value of steel appears, the speculative demand improves, the prices of raw materials such as iron ore and coke rise collectively, and the disk price of steel has strong support. However, the new year is approaching, the actual demand will continue to weaken, the output will rebound, the inventory will accumulate again, and the winter storage price is mostly between 4500-4600. The increase of hedging demand may suppress the space for steel price rebound. Overall, the current steel supply and demand is still weak, and the price trend may still be repeated.

2. Base metal: there is still macro repression, and the rebound space of copper price is limited.

Supported by the warming macro atmosphere and low inventory, copper prices rebounded after experiencing a narrow shock. However, the Omicron virus has brought more uncertainty to the global economic recovery. At the same time, a number of Fed officials have made hawkish remarks one after another to support the dollar index to rise again, and copper prices are expected to be under pressure again. From the perspective of fundamentals, on the one hand, the supply of upstream copper mines shows an increasing trend, the supply of copper mines has improved compared with the previous period, and the import of crude copper has gradually recovered. The supply of raw materials for smelters is sufficient, and the production scheduling enthusiasm of smelters is high. China’s refined copper output is expected to remain high; On the other hand, although the consumption in the downstream is weakening before the Spring Festival, there is a willingness to bargain hunting and stock, the inventory maintains a downward trend, and the market presents a tight supply situation, which forms a strong support for the copper price. Copper prices are expected to remain high and volatile.

Precious metals: Recently, affected by the energy problem, the US dollar index fell, supporting the rebound of gold. However, under the pressure of high inflation, the expectation of the Federal Reserve to raise interest rates continues to rise, and the high level of gold is still under pressure. Pay attention to the new guidelines on the prospect of interest rate increase at the Federal Reserve’s interest rate meeting this month.

3. Energy and chemical industry: supply and demand are tight, and crude oil prices fluctuate upward.

At present, the supply and demand of crude oil remains tight, and the oil price may continue to fluctuate upward. On the one hand, the covid-19 epidemic continues to deteriorate, and many countries tighten epidemic prevention measures, but it has not had more impact on the demand for crude oil. High frequency data show that the traffic congestion index and airport security inspection personnel in the United States are at a high level, reflecting that the consumption of refined oil has not been affected. Therefore, The demand of crude oil market is still good; On the other hand, OPEC + continues to adhere to the production increase plan of 400000 barrels / day, but smaller oil producing countries cannot achieve production increase, while the United States has insufficient power to increase shale oil production, and there are still many uncertainties on the supply side. In the follow-up, we will continue to pay attention to the output policy of OPEC + and the trend of monetary policy of the Federal Reserve.

4. Shenzhen Agricultural Products Group Co.Ltd(000061) aspect: the supply continues to be disturbed, and the oil runs at a high level.

Us beans: the USDA report shows that the global soybean inventory has decreased, from 102 million tons to 95 million tons. At the same time, the Brazilian soybean output most concerned by the market is estimated to be 139 million tons, lower than the previous record expectation of 144 million tons. Bean prices have risen one after another.

Soybean oil: monitoring shows that on January 10, the soybean oil inventory of major oil plants in China was 770000 tons, 10000 tons lower than the same period last week, 20000 tons lower month on month, 120000 tons lower than the same period last year, and 320000 tons lower than the average value in the same period in recent three years. With the decline of China’s soybean crushing profit, the enthusiasm of oil plants to start up is restrained, and the preparation before the Spring Festival will be started one after another, it is expected that the soybean oil inventory will remain low in the later stage.

Palm oil: sppoma data show that from January 1 to 10, horse palm production decreased by 32.10% month on month, narrower than the previous five days. At present, Malaysia’s palm oil is still in the production reduction cycle, which interferes with the harvesting work due to the superposition of labor shortage and floods in Malaysia and China. It is expected that the output may not recover significantly before the first quarter. In addition, according to SGS data, from January 1 to 10, the export of horse palm decreased by 40.6% month on month, indicating that the export demand of palm oil was significantly weakened, dragging down the rise of palm oil.

With the continuous strengthening of the expectation of horse palm production reduction, the price of palm oil rebounded strongly, and there were also weather disturbances in beans, so the price trend of soybean oil was strong. Superimposed on the sharp rise in international crude oil prices, supporting oil prices. On the whole, oil prices may remain high and strong in the short term.

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