Black Series Commodity Violence Pull Up Again, Wenhua Commodity Index Approaches 200 Points, Absolute "High Price Zone"

[iron ore stretching shock wave]

On May 10, iron ore futures multiple contracts very rare collective trading limit, which is based on the adjustment of the variety's rise and fall to 10%. Driven by this, thread, wire, hot coil three major finished products are all trading. At present, 1300 yuan / ton iron ore and 6000 yuan / ton deformed steel bar are obviously at the historical absolute high level, and the potential risks brought about by further increase have begun to highlight. More and more iron and steel enterprises have been buying hedging power, but the profit margin of downstream enterprises has been further squeezed, with frequent refunds and defaults, and processing enterprises have stopped production.

"Unarmed, hoping for coal to quench thirst, turning a stone into gold, losing one's burnt arm..." on May 10, a circle of friends released by a foreign institutional trader summarized the recent market situation of bulk commodities.

Although it is a joke, the comments are extremely accurate. From the perspective of the performance of the domestic futures market after May 1, the rising varieties are mainly concentrated in black series commodities.

On May 10, iron ore futures multiple contracts very rare collective trading limit, which is based on the adjustment of the variety's rise and fall to 10%. At about 14:30 p.m. on the same day, the three major finished products of screw thread, wire rod and hot coil were all up and down, and the main contracts of coking coal and glass futures increased by more than 6%.

Driven by this, the Wenhua commodity index, which tracks the prices of a package of domestic commodities, has risen continuously, and reached a new high of 197.22 points in recent ten years.

It should be pointed out that the 200 point index belongs to the absolute "high price zone" just like the US $1800 to the international gold price. In history, only a few months from 2008, 2010 to 2011 reached this level.

However, with the continuous rise in commodity prices, market divergence has also begun to increase. For example, the coal, coke and steel industry chain varieties, the overall position scale has not increased but decreased recently.

"The market to this point, need to go out under the field investigation." Liu Huifeng, who is now the chief researcher of black metal in Donghai futures, said on the high-speed rail to Tangshan that day.

Led by black, iron ore futures soared 16% in three days

Pro cyclical industry, almost all the hot spots in the secondary market after the May 1st Festival. On May 10, coal, nonferrous metals and steel were still the top gainers of a shares.

As early as May 6, this trend had already appeared. Among the 35 stocks included in Shenwan steel plate on the same day, 34 steel stocks closed up, and 7 steel stocks such as Anyang steel, Chongqing Iron and steel, Benxi steel plate Co., Ltd. closed up.

Accompanied by the recent three trading days, black commodities in the futures market violence pull up.

Taking 2109 contract of iron ore futures as an example, the settlement price on April 30 was 1108.5 yuan / ton, and it had risen to 1286.33 yuan / ton by May 10.

In other words, the variety rose by 16% in three trading days. This is very rare for iron ore futures with a limit of only 4%.

In addition, ore is the source of coal, coke and steel industry chain, and its price rise has played a leading role in the whole body.

As a result, the whole black commodity collective pull up. May 10 is a typical case. On that day, the futures of thread, wire rod and hot coil were all up and down, only limited to the 6% limit, which was slightly lower than that of iron ore.

Although the trend of non-ferrous metals, glass and other varieties is also very strong, but the overall increase is still unable to compare with the black series commodities. Recently, it is in the "second echelon" position in the commodity growth list, and the periodic growth of chemical and soft commodity plates is lower.

The trend of the above differences, including a variety of factors to promote.

First of all, most of the black products are domestic products with independent pricing, and their price elasticity is significantly higher than that of international products such as nonferrous metals and crude oil.

Secondly, black products have good supply and demand expectations.

"In the first quarter, domestic crude steel output increased as a whole, so the market's expectation is that if we want to achieve the goal of reducing crude steel output throughout the year, we will certainly limit the supply side with greater strength." Liu Huifeng thinks.

On the demand side, domestic infrastructure and real estate demand gradually recovered, and the steel export data in April was not affected by the tax rebate policy, providing demand support again.

On the one hand, the supply side formed a contraction expectation; on the other hand, the demand side recovered steadily. Under the superposition, the overall supply and demand of steel was expected to be better.

As far as iron ore is concerned, it is driven by both fundamental and emotional aspects.

"At present, the steel plant is in the stage of high profit. Recently, the profit per ton of steel once exceeded 1000 yuan. Although they are all talking about reducing the output of crude steel, it can be seen from the weekly data in April that the output does not decrease but increases instead, so it is difficult to establish the logic of reducing ore consumption due to production restriction." Liu Huifeng said.

In addition, he also proposed a detail, that is, in the state of limited production, steel mills tend to use high-grade ore, which makes the port's high-grade ore inventory continue to decline. Iron ore prices continued to rise, and all the way to billet, finished products and other spot markets, as well as the securities market conduction.

May 10, iron ore futures contracts a very rare collective limit- Xinhua News Agency

Guard against "the fracture of price transmission chain"

At present, 1300 yuan / ton iron ore and 6000 yuan / ton deformed steel bar are obviously at the historical absolute high level, and the potential risks brought about by further increase have begun to highlight.

Just from the market data, the divergence on whether to further rise began to emerge.

On April 30, the overall position of Wenhua black industry chain was 4.18 million hands. In the following three trading days, the overall position rose to 4.25 million hands, and fell to 4.08 million hands on May 10. At the same time, the overall trading volume change was relatively limited.

In other words, although the price has risen, the transaction and position data of futures market are relatively stable, and there is no obvious centralized inflow of funds, and the overall situation is relatively stable.

"We still have big doubts. One is that the absolute price is too high. In addition, we are also worried about the ability to undertake downstream." Liu Huifeng said.

Another worry comes from the demand side. Take the price performance of hot-rolled coil and cold-rolled coil as an example. The latter is processed by the former, and the latter costs a premium of RMB 5600 per ton in the conventional market.

From the perspective of terminal application, cold rolled coil is also closer to household appliances and other end consumer goods. However, the recent market situation is that the price difference between cold-rolled coil and hot-rolled coil is only maintained at 200-300 yuan, and the rising power of cold-rolled coil is insufficient. Does this reflect the downstream demand from the side is not very good? There are some problems in the price transmission chain?

It should be pointed out that whenever the price transmission is not smooth and the downstream of the industrial chain falls into a large range of losses, it often means the end of the rise in upstream raw materials, which is also one of the signals of the peak price of cyclical products.

For this phenomenon, ye Yanwu, director of Everbright Futures Research Institute, called it "the fracture of price transmission chain".

As early as March this year, he pointed out that there were two signals that the commodity market peaked. One was that credit began to tighten, especially at the policy level. For example, in October 2010, the central bank raised interest rates for the first time, corresponding to February 2011, the whole colored, black and chemical products peaked at the same time, and then began a bear market lasting for five years.

Second, it is related to the industrial chain, and the commodity price has obvious pendulum effect. Most commodities are semi-finished products or raw materials, and the price changes correspond to the profits of the upstream and downstream of the industrial chain, or the distribution of interest pattern.

Specifically, when the raw material price is low, the downstream will benefit and the upstream will lose, and vice versa. For example, the price of natural rubber in the financial crisis of 2008 was 7000 yuan / ton, and rose to more than 40000 yuan / ton in early 2010, which directly led to serious losses of downstream tire enterprises, unable to bear the high cost of raw materials, and the price transmission chain broke and then appeared the inflection point.

According to Liu Huifeng's observation, at present, there has not been a large-scale loss in the downstream. However, due to the steel price of 5100 yuan / ton to 5200 yuan / ton, the impact on the cost side has been very obvious, resulting in some losses.

This means that the above price transmission chain has appeared some signs of local transmission is not smooth? If the price of black series products continues to rise, will it accelerate the speed of conduction chain rupture?