Increase supply, stabilize expectations, curb speculation-
Resolve the trend of commodity price increases
Guests of this issue
Guan Tao, Chief Economist of Bank of China Securities
Guo Liyan, Researcher, Decision Consulting Department, China Academy of Macroeconomics
Xu Yingming, deputy director and researcher of the International Market Research Institute of the Ministry of Commerce
Dong Hao, researcher of Chaos Tiancheng Futures Co., Ltd.
host
Sun Shifang, Member of the Editorial Board of Economic Daily and Dean of China Institute of Economic Trends
Since the beginning of this year, the prices of some bulk commodities have continued to rise sharply. Among them, the prices of iron ore, steel, copper and other varieties have continued the upward trend of last year, and some have reached new highs in the past 10 years, which has attracted widespread attention from all walks of life.
On May 12, the executive meeting of the State Council proposed that it is necessary to track and analyze the domestic and foreign situation and market changes, and effectively deal with the excessively rapid rise in commodity prices and its collateral effects.
On May 19, the executive meeting of the State Council made arrangements to ensure the supply and price stabilization of bulk commodities to keep the economy running smoothly.
What are the main factors contributing to this round of bulk commodity price increases, how do companies respond, and how can my country increase the price influence of important bulk commodities?
In this round of think tanks, experts and scholars are invited to discuss related issues in depth.
Phased mismatch of supply and demand is the main cause of price increases
Moderator: The prices of some commodities continue to rise due to various reasons. Please analyze, what are the main factors for this round of price increases?
Guo Liyan: With the gradual expansion of new crown vaccination coverage, the global economic recovery has driven international bulk commodities into the rebalancing stage of supply and demand. With the help of loose liquidity in major international economies, the prices of raw materials at home and abroad have continued to rise.
The cause of this round of international commodity price increases is mainly due to the impact of the new crown pneumonia epidemic on the global commodity market, disrupting the original rhythm of supply and demand, and "dislocation" of recovery among different types of economies. The recovery of supply lags significantly behind the recovery of the demand side, which has resulted in a phased mismatch of supply and demand.
At the same time, global liquidity is relatively ample, which has also increased price volatility in the short term.
The rise in domestic bulk commodity prices is mainly affected by international import factors, and is basically close to the price trend in the international market. In addition, it is also related to the rebound of the domestic real estate, infrastructure and other industries.
Taking into account that the global economy, especially industrial demand, is still in the recovery stage, the demand support for the continued high international commodity prices is not very strong. Generally speaking, there is still an oversupply, but there is a structural contradiction between supply and demand for some varieties and some regions.
Xu Yingming: I think there are three main factors for the recent continuous increase in commodity prices: First, the world economy continues to recover, and international market demand rebounds, but the epidemic is still spreading globally, supply is still greatly restricted, and demand is recovering faster than The recovery of supply has caused a misalignment of supply and demand.
Second, in response to the epidemic, many central banks have adopted quantitative easing monetary policies. The global money supply has continued to grow, and inflation expectations have intensified.
Third, many commodities have financial attributes, and "speculation" is also one of the important reasons.
Guan Tao: Major economies have introduced large-scale stimulus plans, especially the US government. During the epidemic, the total amount of six rounds of stimulus has reached 5.7 trillion US dollars. The current market expects that total demand will tend to be strong.
In addition, the repeated epidemics have caused supply to fail to keep up with the demand recovery, and the global supply and demand mismatch.
Demand in developed countries with faster vaccination is picking up, and emerging market countries that export raw materials are still fighting the epidemic.
The recent outbreak of the epidemic in India may affect the supply of some medicines and mobile phones.
The central banks of major economies have implemented ultra-loose monetary policies to drive up inflation, further fueling the speculative atmosphere in the commodity market and highlighting the financial nature of commodity trading.
Dong Hao: I think the main factor for the rise in commodity prices is the combined forces of supply and demand.
On the demand side, the Fed’s additional currency issuance after the epidemic exceeded the amount of additional currency issued in the 10 years after the 2008 financial crisis. The current monetary environment is the loosest monetary environment in the past 20 years.
In addition, countries have successively increased their fiscal policy support.
At the same time, with the increase in vaccination, the epidemic situation in major economies is gradually improving, and the economy is recovering.
The enterprise restarts in a short period of time and needs to replenish a large amount of raw material inventory, so there is a radical increase in demand in a short period of time.
In addition to being affected by the traditional economy, new economies such as photovoltaic new energy have entered a period of large-scale production and utilization in the past two years, which has also greatly increased the demand for some raw materials (such as copper, aluminum, and nickel).
CPI maintains a solid foundation for smooth operation
Moderator: In April, the domestic PPI rose 6.8% year-on-year.
Some people worry that the rapid rise of PPI will be transmitted to CPI, causing an overall increase in prices. What do you think about this?
How big is the risk of imported inflation and what impact will it have on my country's economy?
Guo Liyan: There is no need to worry too much about imported inflation.
PPI mainly reflects the price fluctuations of upstream raw materials and intermediate inputs. It is more directly affected by commodity price fluctuations of the "three blacks and one color" (coal, steel, petrochemical, and non-ferrous metals), and is a typical price signal.
The expansion of PPI growth indicates that the price signal's guiding role in the production and circulation of raw materials is accelerating. With the continuous improvement of the capacity utilization rate of the main production materials, the matching degree of upstream and downstream supply and demand will be further improved, and the price stabilization factors in the industrial production field will increase significantly.
Objectively speaking, due to the transmission of international bulk commodity prices and the low base in the same period last year, the PPI growth rate will expand in recent months. Taking into account the tail-lifting factors and the new price increase factors, the second quarter may see a year-round high point.
Looking forward to the second half of the year, as the factors affecting PPI's tail-raising decline, coupled with the divergence of major commodity price trends, some varieties will converge with the improvement of supply and demand matching. The new PPI price increase factors will be corrected compared with the second quarter. The year-on-year increase in PPI may have narrowed.
Based on a comprehensive judgment, this round of PPI growth rebound is staged and temporary, and will show a trend of "low at both ends and high in the middle" throughout the year, and the year-on-year growth rate will decline in the second half of the year.
Commodity prices mainly affect the CPI by influencing the prices of consumer goods. Considering that the terminal consumer goods market has ample supply and competition, the transmission of prices from upstream to downstream is time lag and transmission range is limited, so there is no need to worry too much about the impact of international commodity prices on my country’s CPI. .
Food and services account for a relatively high proportion of the CPI, and are relatively less affected by international factors. The supply of major foods, meat, vegetables, eggs, and milk is relatively abundant, especially pork prices gradually return to normal levels with the recovery of pig production, these are all supports The "stabilizer" for CPI to run smoothly.
Looking forward to the whole year, the CPI has a solid foundation to maintain stable operation and will show a trend of "low in the front and stable in the back."
Xu Yingming: If the international commodity prices continue to rise, it will have a systemic impact on the prices of my country’s energy, chemical, and consumption industrial chains, which will in turn affect the overall industrial product price performance and inflation expectations, and it will pass through the industrial chain. The downstream transmission affects consumer goods. The spread of this transmission effect will affect the overall price level of my country and increase inflationary pressure.
If commodity prices continue to rise, it will not only cause imported inflationary pressures, but will also further reduce the profit margins of related companies.
Guan Tao: At present, judging from the trends of CPI and core CPI, my country's economy is still far from full inflation.
From the perspective of economic indicators in the first quarter, the restoration of domestic consumption demand in my country is slower than other economic indicators, and policy transmission is relatively slow, which is reflected in the gradual restoration of consumption.
If you compare the inflation trend under the stimulus of 4 trillion yuan in 2008, the monthly PPI of the means of living in 2011 was above 0.3%, and now the highest is 0.2%, and it was only 0.1% in April.
Although the increase in the means of production and bulk commodities has been considerable and will be partially transmitted to downstream consumer goods, the transmission capacity is also relatively limited.
Judging from the capacity utilization rate of industrial enterprises in the first quarter, there is no problem with my country's supply, and there is still excess capacity. In the long run, downward pressure on inflation may be more prominent.
Imported inflation has a relatively limited impact on the consumption of Chinese residents, mainly affecting the distribution of profits between industries.
Structural distortions may cause greater pressure on production and operation of some mid- and downstream enterprises.
If you continue to rely on investment to drive economic growth, the cost will be relatively high, and there will be concerns about overcapacity in the future.
Dong Hao: Due to the effective prevention and control of the epidemic, my country's monetary policy is not more radical than other countries, but it is difficult not to be affected under the system of global trade in commodities.
The rise in the price of raw materials will partly affect the end products, but the intermediate processing companies will also absorb certain rising costs as a buffer zone, so the price rise of the end products will not be more dramatic than that of the raw materials.
The increase in CPI will not be sharper than PPI.
In addition, CPI is composed of essential consumer goods. Not all consumer goods are affected by the price of raw materials, such as live pigs, vegetables and other agricultural products. They have their own cycle. It is expected that the increase in CPI will be relatively moderate.
Make good use of price management tools to speed up the domestic cycle
Moderator: At present, my country's economy is still in a stage of recovery growth. In the face of the pressure on the cost of enterprises caused by the sharp rise in international commodity prices, how should the macro policy be grasped?
How do companies respond?
Guo Liyan: The current round of international commodity price increases is mainly caused by structural problems caused by import factors and phased mismatches of supply and demand, not a total volume problem.
Therefore, it is necessary to maintain policy determination, maintain the continuity and stability of macro policies, do not make a sharp turn, grasp timeliness, focus on strengthening the foundation, stabilize expectations, and adopt effective measures to increase effective market supply, stabilize market competition and eliminate the market Unnecessary worries, investigating and punishing speculative behavior, so that commodity price fluctuations return to economic fundamentals as soon as possible, strive to stabilize the overall price level operation within a reasonable range, and do a good job in ensuring the supply and price stability of important livelihood commodities.
Affected by the increase in international commodity prices, some domestic companies have prolonged their raw material procurement cycles and increased their procurement costs. In particular, small and medium-sized enterprises that lack brands, technologies and economies of scale may be under greater pressure.
Enterprises should have the main consciousness and responsibility to turn crises into opportunities, strive to hedge the pressure of rising costs through their own transformation and upgrading and innovation and development, actively optimize the management of raw material supply, strive to explore domestic and foreign markets, and find new opportunities and new value points.
Xu Yingming: Macroeconomic policies should guide consumption expectations, increase effective supply, and reduce corporate costs.
Specifically, one is to strengthen the release of authoritative information.
In the process of bulk commodity price increases, due to supply or unexpected events, the fluctuation range of some commodities may increase. It is necessary to further improve the commodity price monitoring and early warning mechanism, closely monitor and pay attention to the fluctuation range of some commodities, in a timely and effective manner. release news.
The second is to introduce policies to promote automobile consumption and home appliance consumption at the right time to reduce the impact of rising consumer product prices on the domestic cycle and reduce inflation expectations.
The third is to increase the effective supply of bulk commodities.
Taking advantage of the opportunity of rising commodity prices to benefit the basic raw material industry, we will intensify the exploration and development of domestic strategic mineral resources, and give priority to arranging new domestic high-quality commodity projects.
Encourage leading bulk commodity companies to integrate upstream and downstream companies, and promote the "self-hedging" of price fluctuation risks in the upstream and downstream links of the industrial chain.
The fourth is to effectively reduce the costs of related enterprises.
On the basis of adjusting import tariffs on steel products and raising export tariffs, the scope of product application will be expanded.
Guan Tao: The main function of monetary policy is to regulate domestic demand. Domestic demand is hardly overheated. We should pay more attention to changes in the job market. At the same time, we need to pay close attention to the flow of credit to prevent companies from over-investing due to rapid short-term price increases.
Fiscal policy may be the main tool to deal with structural inflation. Fiscal tax regulation and targeted expenditure function can help alleviate the unevenness of hot and cold across industries.
At present, the imbalance of recovery between industries still exists, and the hot industries are very hot, such as the international shipping and raw material production sectors.
Cold industries, such as international tourism and some service industries, have not yet emerged from the predicament brought about by the epidemic.
Companies need to judge whether the price is sustainable to decide their investment plan, and whether the epidemic has changed the ecology of the industry to decide their business plan.
For companies affected by the epidemic in the short term, financial assistance is still needed.
For enterprises, it is especially necessary to make good use of the futures market as a tool.
From the current point of view, the futures market has built a complete risk management tool market.
In this round of price increases, it is precisely because of the role of the futures market that many companies have successfully avoided the risk of rising raw material prices.
Improving the price influence of the domestic bulk commodity market
Moderator: "Improve the price influence of important commodities, better serve and lead the development of the real economy." This round of commodity price increases has highlighted the urgency of this issue. How to increase the price influence of important commodities?
Guo Liyan: Entering a new stage of development, my country needs to rely more on the unified domestic market to form price signals that truly reflect market supply and demand, and seek price influence commensurate with its own economic level, so as to better promote economic circulation and smooth industrial connections. Support the realization of stronger and more sustainable high-quality development.
To this end, it is necessary to continuously improve the construction of the domestic bulk commodity industrial chain, enhance the resilience and shock resistance of the domestic market supply chain, and actively and effectively respond to various market risks.
At the same time, promote more "Chinese prices" to play a signal role, guide and encourage Chinese entities to actively use "Chinese prices" in the process of international trade negotiations and settlement, better reflect the domestic market supply and demand, and help accelerate the fluctuation of international commodity prices. Return to economic fundamentals.
Xu Yingming: It is necessary to build an international bulk commodity pricing center to improve the security of the supply chain of strategic mineral resources.
Accelerate the construction of the commodity futures and options market. While giving full play to and expanding the role of crude oil, iron ore, copper and aluminum, soybeans and other futures varieties, continue to promote the cross-border settlement of iron ore in RMB, and introduce other commodities priced and settled in RMB Commodity futures will gradually strive for the pricing power of some commodities.
At the same time, the establishment of a strategic reserve of bulk commodities, for the strategic mineral resources that are highly dependent on foreign sources and the supply chain may be "stuck", learn from the experience of petroleum reserves, and accelerate the establishment of strategic reserves.
It is necessary to strictly implement the Foreign Investment Law, create an international, market-oriented, and legal-based business environment, rely on the domestic commodity futures and spot trading markets, attract key international companies to participate in the construction of domestic futures and spot markets, and accelerate the construction of key commodity benchmark delivery sites and Physical delivery warehouses, combined with the construction of domestic pilot free trade zones, will advance the opening of the futures market in an orderly manner, continue to expand the scope of specific futures varieties, and improve the security of the supply of key bulk commodities.
It is necessary to broaden the diversified supply channels of bulk commodities and enhance the resilience of the bulk commodity supply chain.
Promote the "Belt and Road" bulk commodity cooperation projects in a steady and orderly manner.
Strengthen the connection with major international bulk commodity suppliers and suppliers to enhance the resilience of the bulk commodity supply chain.
Guan Tao: my country is the world's largest importer of raw materials, but major commodities are priced in US dollars.
In the future, it is necessary to build an international financial asset trading platform, increase my country's global pricing influence in the bulk commodity market, and promote the orderly promotion of RMB-denominated bulk commodity transactions.
Regulatory departments must actively create conditions to promote the high-quality development of the futures market and better serve the real economy.
It is necessary to actively expand the depth of futures products to serve the real economy, encourage futures operating institutions to increase their capital strength, provide physical enterprises with comprehensive services such as commodity spot supply and risk management, and improve cross-border service capabilities and control of global resources.
Entity enterprises should also use futures trading tools to manage the risk of commodity price fluctuations based on the principle of risk neutrality.
Dong Hao: For some commodities dominated by foreign supplies, it is recommended to actively adjust the supply layout to avoid certain key raw materials from being restricted by a single company or country.
In addition, it is necessary to encourage the integration of domestic related industries and increase the degree of concentration, so as to take the initiative in negotiations with the upstream.
(This article was compiled by our reporter Zhu Huichun, Feng Qiyu, and Xiong Li)