On October 13th, the National Bureau of Statistics released the main data for the industrial producer prices in September 2024. In the industrial producer purchase prices, the year-on-year and month-on-month prices for fuel and power, ferrous metal materials, chemical raw materials, wood and pulp, building materials and non-metals, other industrial raw materials and semi-finished products, agricultural and sideline products, and textile raw materials all decreased, with the decline ranging from -0.1% to -6.8%. In contrast, the prices for non-ferrous metal materials and wire and cable increased by 7.4% year-on-year and decreased by 0.6% month-on-month.

Previously, the China Federation of Logistics and Purchasing released the China Bulk Commodity Price Index (CBPI) for September 2024 at 110.1 points, a slight month-on-month decline of 0.2%, and a year-on-year decrease of 6.7%. Analysis suggests that, considering the index operation, the CBPI in September was influenced by the recovery of market demand and the central bank's interest rate cuts and reserve requirement ratio reductions, leading to a rebound in the prices of most bulk commodities from low levels, with the index decline narrowing by 3.4 percentage points compared to the previous month. It is expected that in the fourth quarter, with the recovery of business production and operational activities, the strengthening of market confidence, and the increased counter-cyclical adjustment of monetary and fiscal policies, the foundation for economic stability and improvement is likely to be further consolidated. Looking at the trend of domestic and international bulk commodity indices, the global monetary policy is shifting from a tightening cycle to an easing cycle, which will be beneficial for expanding market demand, promoting corporate investment, and providing support for bulk commodity prices.

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By industry, the non-ferrous metal price index stopped falling and rebounded, reporting 124.7 points, a month-on-month increase of 1.8%, and a year-on-year increase of 1.7%; the agricultural product price index slightly fell, reporting 94.8 points, a month-on-month decrease of 1%, and a year-on-year decrease of 24.8%; the black metal price index narrowed its decline, reporting 78.4 points, a month-on-month decrease of 1.2%, and a year-on-year decrease of 14.4%; the mineral price index fell again, reporting 79.5 points, a month-on-month decrease of 1.4%, and a year-on-year decrease of 8.8%; the energy price index continued to decline, reporting 103.6 points, a month-on-month decrease of 3.8%, and a year-on-year decrease of 13.4%; the chemical price index saw an expanded decline, reporting 110 points, a month-on-month decrease of 3.9%, and a year-on-year decrease of 9%.

Bulk agricultural product prices fell but remained within a normal range.

Regarding the changes in bulk agricultural product prices in September, Hu Bingchuan, a researcher at the Rural Development Research Institute of the Chinese Academy of Social Sciences, told the reporter that overall, the prices of bulk agricultural products maintained a relatively stable state in September. Although some categories experienced a certain proportion of decline, it was within a normal range. The current supply and demand fundamentals of the entire agricultural product market still maintain a basic equilibrium in the game, with not much additional demand.

Domestically, Hu Bingchuan pointed out that in recent years, China's grain production has been stable and high-yielding, and this year's autumn grain production is expected to reach a high level, very likely to set a new historical record. In the absence of significant changes in the supply and demand fundamentals, it is expected that the prices of bulk agricultural products will continue to maintain a basic equilibrium state.

Zhao Xia, a professor at the College of Economic Management of China Agricultural University and deputy director of the National Agricultural Market Research Center of China Agricultural University, said in an interview with reporters that overall, in September, the prices of bulk agricultural products, except for cotton and soybean meal, generally showed a downward trend, with corn, peanuts, and pig prices falling significantly. The main factors affecting price fluctuations are still market supply and demand.

Zhao Xia pointed out that pig prices fell the most, on the one hand, because pig farming has a fast and high level of market supply, with ample supply, and on the other hand, pig consumption has dropped significantly compared to before the Mid-Autumn Festival. In October, with the arrival of the National Day holiday, pig prices may rebound. In the future, as people's living standards improve, the substitution of beef, mutton, fish, and other meats for pork will gradually increase, which will continue to have a negative impact on pig prices.

The Fed's rate cut boosts non-ferrous metal prices.

Zhao Fei, an analyst at卓创资讯, told reporters that in September 2024, the prices of non-ferrous metal sector products varied. Monitoring spot price data shows that there were price increases for 5 non-ferrous metal products and a price decrease for 1 product. Among them, electrolytic copper increased by 6.76%, the largest increase; while electrolytic lead fell by 3.63%, the largest decrease. On the macro level, the Fed's rate cut of 50 basis points and the domestic central bank's reserve requirement ratio reduction and other favorable policy releases have boosted market confidence and driven the bulk market to improve comprehensively. In addition, before the Mid-Autumn Festival and National Day holidays, downstream enterprises' demand for stocking up was good, forming price support.Breaking down the categories, in September, copper prices continued to rise. Fundamentally, smelters gradually underwent maintenance in September, with many facing insufficient raw material supplies, making it difficult to operate at full capacity, leading to a tight supply. Zhao Fei believes that the fermentation of early macroeconomic sentiment will weaken, and copper prices may experience a brief correction. High short-term prices have a certain inhibitory effect on demand. Later, with the expectation of further interest rate cuts by the Federal Reserve, it is expected that copper prices will fall first and then rise in October.

After a correction, aluminum prices rebounded in September. On the macro level, the market sentiment was bearish in the early part of the month, and then warmed up in the middle and late parts. The fundamentals operated steadily, with aluminum ingots arriving in the main consumption areas being relatively scarce, and downstream factories steadily absorbing them, leading to a continued decline in aluminum ingot social inventory. The start-up of downstream profiles, wire and cable, sheet, strip, and foil sectors all increased, with pre-holiday stocking demand supporting price increases.

Lead prices fell first and then rose in September, with the center of gravity shifting downward. This was mainly due to the low operating rate of downstream battery companies, weak market demand, and some accumulation of lead ingots in the market, putting pressure on lead prices. In the latter half of the month, lead prices rebounded, mainly due to pre-holiday stocking stimulating consumption, coupled with continuous domestic favorable policies, improving macroeconomic sentiment, and boosting lead prices.

Nickel prices fluctuated and fell in September. The main reason is the low demand for stainless steel, which formed pressure, and the trading center continued to move downward. Zhao Fei believes that there is not much chance for the stainless steel market on the consumption side to improve in October. At the same time, there is a possibility of steel mills reducing production and maintenance, and the decline in demand will affect the trend of nickel prices. It is expected that nickel prices will maintain a consolidation trend in October.

The steel market rebounded in September 2024. Affected by the expectation of the traditional construction peak season, the gradual warming of market transactions, the relatively weak cost, and the release of a basket of financial policies, the domestic steel market showed a trend of initial suppression followed by a rebound and fluctuation.

Lange Steel Network monitoring data shows that by the end of September, the comprehensive price of steel across the country was 116 yuan/ton higher than at the end of the previous month, a month-on-month increase of 3.3%, and a year-on-year decrease of 11.4%. In terms of monthly average values, it continued to move downward compared to the previous month. In September, the average comprehensive price of steel across the country was 57 yuan/ton lower than the previous month, a decrease of 1.6%.

Wang Guoqing, director of the Lange Steel Research Center, told a reporter from the 21st Century Economic Report that in September, with the main raw materials first falling and then rising, the spot cost index showed a bottoming and rebounding trend; however, the average monthly cost level continued to move downward, with the average monthly cost calculated from spot inventory raw materials showing a slight downward trend, while the average monthly cost calculated from two-week and four-week inventory raw materials showed a more significant downward trend compared to the spot.

Wang Guoqing believes that with the start of the global interest rate reduction cycle, it will support commodity prices. Looking forward to October, as macro policies continue to be strengthened and implemented, October is still in the peak season for demand, and the release of downstream demand is expected to rebound. Steel production will rebound from a low level, and cost support resilience will reappear. It is expected that the domestic steel market will show a trend of fluctuating and rising operation in October.