On October 13th, the National Bureau of Statistics released the main data for industrial producer prices in September 2024. In the purchase prices of industrial producers, 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 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 decrease of 0.2% and a year-on-year decline of 6.7%. Analysis suggests that, considering the index's performance, 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's decline narrowing significantly by 3.4 percentage points compared to the previous month. It is expected that in the fourth quarter, as business production and operational activities pick up, market confidence strengthens, and the counter-cyclical adjustments of monetary and fiscal policies are intensified, 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 shift from a tightening cycle to an easing cycle will be beneficial for expanding market demand, promoting corporate investment, and providing support for bulk commodity prices.

Advertisement

Bulk agricultural product prices have decreased but remain within a normal range. In response to 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 a reporter from the 21st Century Economic Report that overall, bulk agricultural product prices maintained a relatively stable state in September. Although there was a certain percentage decrease in some categories, it was within the 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, potentially setting a new historical record. In the absence of significant changes in the supply and demand fundamentals, it is expected that bulk agricultural product prices 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, told a reporter from the 21st Century Economic Report that overall, in September, bulk agricultural product prices, except for cotton and soybean meal, generally showed a downward trend, with corn, peanuts, and live pig prices experiencing larger declines. The main factors affecting price fluctuations are still market supply and demand.

Zhao Xia pointed out that the price of live pigs fell the most, on the one hand, due to the fast and high level of pig farming, with ample supply, and on the other hand, pig consumption fell significantly compared to before the Mid-Autumn Festival. With the arrival of the National Day in October, 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 some negative impact on pig prices.

The Federal Reserve's interest rate cut boosts non-ferrous metal prices. Zhao Fei, an analyst at卓创资讯, told a reporter from the 21st Century Economic Report that in September 2024, the prices of non-ferrous metal sector products varied. Monitoring spot price data showed that there were price increases for 5 non-ferrous metal products and a decrease for 1 product. Among them, electrolytic copper increased by 6.76%, the largest increase; while electrolytic lead decreased by 3.63%, the largest decrease. On the macro level, the Federal Reserve's interest rate cut of 50 basis points and the domestic central bank's reserve requirement ratio reduction, along with other favorable policies, boosted market confidence and led to a comprehensive improvement in the bulk market. In addition, stocking up before the Mid-Autumn and National Day holidays, and the improved demand from downstream enterprises, formed price support.

Looking at specific categories, in September, copper prices continued to rise. Fundamentally, in September, smelters gradually underwent maintenance, and many smelters faced insufficient raw material supply, making it difficult to operate at full capacity, leading to a tight supply. Zhao Fei believes that the fermentation of previous macro emotions will weaken, and copper prices may experience a brief回调, with high short-term prices having a certain suppressive effect on demand. Later, with the Federal Reserve still expected to cut interest rates, it is expected that copper prices in October will first fall and then rise.In September, aluminum prices rebounded after a correction. On the macro level, market sentiment was bearish in the early part of the month, but 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 rates in downstream sectors such as profiles, wires and cables, and sheet and foil have 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 low operating rates in downstream battery companies, weak market demand, and some accumulation of lead ingots in the market, putting pressure on lead prices. In the late part of the month, lead prices rebounded, mainly due to pre-holiday stocking stimulating consumption, coupled with continuous domestic favorable policies, which improved macro sentiment and boosted lead prices.

Nickel prices fluctuated and fell in September. The main reason was the low demand for stainless steel, which put pressure on the trading center and kept it on a downward trend. Zhao Fei believes that there is not much chance for the stainless steel market to improve on the consumption side in October, and at the same time, steel mills may reduce production and maintenance, which could lead to a decrease in demand affecting the trend of nickel prices. It is expected that nickel prices will maintain a consolidating trend in October.

The steel market rebounded in September 2024, influenced by factors such as the expectation of a traditional construction peak season, gradually warming market transactions, relatively weak costs, and the release of a basket of financial policies, showing 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%. Looking at the monthly average, 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 decreasing and then increasing, 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 decline, while the average monthly cost calculated from two-week and four-week inventory raw materials showed a more significant decline 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, with macro policies still being continuously strengthened and implemented, and October still being in the peak season for demand, the release of downstream demand is expected to rebound, steel production will rise from a low level, cost support will re-emerge with resilience, and it is expected that the domestic steel market will show a trend of fluctuating and rising operation in October.