On May 19, Chinese Premier Li Keqiang mentioned the issue of commodity price hikes again at the State Standing Committee meeting, demanding to safeguard supply and curb unreasonable price hikes. Affected by this news, the price of Chinese black futures commodities fell sharply on May 20. Wang Jian, a veteran overseas media, pointed out that Li Keqiang’s meeting, emphasizing the “offer to stabilize supply”, indicating that soaring commodity prices have caused an impact on the Chinese economy.
Li Keqiang asked “price stability supply” black futures commodities fell sharply
On May 20, China’s stock market coal, steel, non-ferrous sectors have seen huge declines, round the tide of losses. Coal, steel plunged more than 4%, non-ferrous plunged nearly 3%. As for individual stocks, Anyang Steel fell over 8%, Shanxi Coal International plunged 8.23%, Tianshan Aluminum fell over 7%, TISCO Stainless and Shandong Steel fell over 6%, and Luoyang Molybdenum and Jiangxi Copper fell over 4%.
In Hong Kong, related sectors also generally sank, with Minmetals Resources plunging 11.37%, Anshan Steel down 9.46%, Zijin Mining down 8.53%, Aluminum Corporation of China down 7.99%, Yanzhou Coal down 8.95%.
The mainland financial media “Gronghui” reported on May 20, May 19, cryptocurrency plunge overlaid with the U.S. stock rate hike is expected to bring the collapse of the commodity market, China’s commodity futures night black system fell in general, coking coal fell, power coal, iron ore, thread can have fallen more than 7%; May 20, commodity futures market continued to plunge, coking coal main, dynamic coal main fell more than 7%, iron ore, thread, etc. fell more than 5%, coke fell more than 6%, Shanghai copper, Shanghai aluminum are down more than 2%.
On May 19, Chinese Premier Li Keqiang presided over an executive meeting of the State Council and asked the State Council to pay attention to the negative impact of rising commodity prices, to protect supply, curb unreasonable price increases, and try to prevent the transmission to consumer prices. This is the second week in a row that the State Council has spoken out against the rising prices of commodities.
Bloomberg reported that Li Keqiang in the context of carbon neutral and the established timetable, but still proposed to “increase production and supply” of coal, showing a sense of urgency to control upstream inflation in the short term.
Previously, global commodity prices rose rapidly, with many varieties of prices reaching record highs, mainly due to the global steel market rebounded sharply, international trade friction, uncertainty in the supply of raw materials, monetary policy and other factors, iron ore, scrap and other steel raw commodities have a short-term supply and demand mismatch.
Affected by this, A-share pro-cyclical plate also set off a tide of stops. Since the beginning of this year to early May, the steel sector rose nearly 40%, coal rose 25%, the non-ferrous sector rose nearly 20%.
To curb the excessive rise in futures commodity prices, China’s futures exchanges have raised transaction fees.
On the evening of May 10, the big trading house announced that the big trading house said, iron ore futures 8 contracts up, the next trading day, the relevant contract up and down stop margin and margin level will be adjusted upward accordingly; Zhengzhou Institute of Commerce announced that the settlement on May 13, power coal futures contract trading margin standard adjusted to 12%, up and down stop margin adjusted to 8%; May 11 night trading on the same night, the trading fee standard Adjusted to 30 yuan / hand, the intra-day closing transaction fee standard adjusted to 30 yuan / hand; the Shanghai Futures Exchange decided that from May 12 trading, rebar Rb2110 contract intra-day closing transaction fee adjusted to one ten thousandth of the transaction amount, hot-rolled coil Hc2110 contract intra-day closing transaction fee adjusted to one ten thousandth of the transaction amount.
At the same time, various departments of the Chinese Communist Party have also made frequent statements on the issue of commodity prices.
On May 18, the CPC National Development and Reform Commission Policy Research Office Director, Commission spokesman Jin Xiandong said that rising commodity prices can improve the profitability of upstream raw material enterprises, but will also lead to rising operating costs in the middle and lower reaches of the manufacturing industry, affecting industry efficiency.
The CPC Bureau of Statistics Fu Linghui also said that the price increase overall is conducive to the improvement of business efficiency, but the pressure on the downstream industry needs to be paid attention to. Follow-up will take effective measures to strengthen the market regulation of raw materials.
Wang Jian, a veteran media figure: China’s economy is under attack
Wang Jian, a senior overseas media figure, said in the May 19 Live 2 program that Li Keqiang hosted a regular meeting of the State Council on the theme of “maintaining prices and stabilizing supply” of commodities, indicating that rising commodity prices have begun to hit China’s economy, with coal prices soaring and power restrictions being imposed again in some areas of China.
The Chinese media “Niuqian” reported on May 19 that some cities in Guangdong and Yunnan have opened peak power supply due to the tight power supply in the south, and the current round of peak power supply has a certain impact on some industrial enterprises, among which some non-ferrous metal smelting enterprises have received power restriction notices.
Yunnan power grid on May 10 issued an emergency peak preparation notice shows that the recent Yunnan main reservoir overdraft serious, thermal power storage coal continues to decline, power generation is seriously less than expected, the short term is expected to continue to decline in provincial coal.
Some zinc smelters in Yunnan have already started to respond to the request for power restriction by reducing production by a certain amount; some areas in Guangdong have opened up to peak electricity consumption, with some users in Guangzhou, Foshan, Dongguan, Huizhou, Zhuhai, Zhongshan and Chaozhou being asked to peak electricity consumption.
On May 14, State Grid Sichuan Aba State Electric Power Co., Ltd. also issued a power outage notice showing that since May, the Sichuan power grid load continues to grow at a high rate, the shortage of coal supply, the form of power supply is very serious. The relevant departments at the provincial level, plans to May 16 on the hydropower consumption demonstration area in all big data users to implement temporary all-day power restrictions, restore time depending on the supply and demand situation to be notified.
Guangdong power grid to customer notice, Guangdong Province, power supply is tight, Shantou City plans to implement the “open five stop two” power measures on May 18, 2021, users need to take two days off from the base day (Tuesday), during the peak hours (9-12 hours, 14-17 hours, 18-21 hours) to stop the production of electricity, only Security insulation load is reserved. If customer households do not implement the requirements, the power supply bureau has the right to implement mandatory power restriction measures.
Wang Jian pointed out that the power restriction will hit Chinese industrial production, especially the high energy consumption industries will be hit.
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