This past March, US stocks broke down four times, crude oil halved, and silver prices broke through a decade low. A Beijing investor in silver futures lost hundreds of thousands of yuan in one night, and "his wife was gone."
In this round of global financial turmoil caused by the outbreak of the COVID-19 epidemic, compared with the stock market, the impact of the decline in commodity prices on the real economy may be wider than that of the stock market.
A reporter from Securities Times e Company recently learned in many interviews that due to the impact of the collapse in global aluminum prices, domestic aluminum enterprises have fallen into overall losses, while a series of chemical commodity prices have declined due to a "50% discount" in crude oil prices. the impact on enterprises in the industry continues. Problems such as high inventory and urgent need to reduce production have become serious examination questions in front of many enterprises.
In mid-late March, as soon as the epidemic prevention and control situation in Henan had just been alleviated, Hu Jun (a pseudonym), the head of a medium-sized pre-baked anode production enterprise in Gongyi, began to rush around for docking cushions.
"International aluminum prices have plummeted, and now electrolytic aluminum enterprises are losing money in an all-round way. As an upstream, pre-baked anode production is not enough to lose money, but the financial pressure has begun to highlight. " In the face of the current production and operation of the upstream and downstream of the aluminum industry, Hu Jun said to the reporter of the Securities Times e Company that he was not optimistic. In March, the main contract price of Shanghai Aluminum fell from a high of 13450 yuan / ton at the beginning of the month to a minimum of 11275 yuan / ton at the end of the month, the lowest since April 2016. The loss per ton of products produced by electrolytic aluminum enterprises in Henan is close to 2000 yuan. Although there has not been a sharp decline in the price of pre-baked anodes as a result of the collapse in aluminum prices, the industry leader Shandong Weiqiao has also lowered its latest offer by 220 yuan / ton in April.
"the raw materials of the anode are petroleum coke and asphalt, both of which need cash to buy, so there is a very high requirement for the cash flow of the enterprise. Even in 2015, when the price of electrolytic aluminum was as low as more than 9000 yuan per ton, the anode was still profitable, otherwise no one would have done it. However, although the production of products is profitable, the speed of repayment by electrolytic aluminum enterprises is not certain. The aluminum industry's loss payback is bound to slow down, which will drag a number of anode companies to death. "
Whether to do it or not is the choice that Hu Jun's enterprises are facing at present. If the production continues, few electrolytic aluminum manufacturers will be carried out in full accordance with the contract period, and enterprises will face greater financial pressure than before. However, if production is stopped, workers will not be paid for two or three months, they may go to other places to look for jobs, and downstream customers will also be lost. "now it depends on who can stand it. If you can't stand it, you may be eliminated this round."
For the current domestic aluminum industry production and marketing situation, A-share listed aluminum enterprise Wang Wei (a pseudonym) view is more pessimistic. "although the price of less than 10,000 yuan per ton at the end of 2015 was the lowest in history, the situation is even worse now than it was then."
He said that the whole industry almost broke even at about 13000 yuan / ton of aluminum. Although the production cost in Xinjiang is relatively advantageous, the total cost is less than 11000 yuan / ton, but after adding tax, the cost also reaches about 12500 yuan, so it is a loss for the whole industry at present.
Although the price of electrolytic aluminum fell to more than 9000 yuan per ton in 2015, the price of raw material alumina also fell from 2350 yuan at the beginning of the year to about 1630 yuan. At present, the price of alumina is still more than 2300 yuan per ton, so for aluminum enterprises, the level of aluminum price of more than 11000 yuan is basically the same as that of more than 9000 yuan at that time. " Wang Wei analyzed that the price of alumina is now nearly 1000 yuan higher than when the aluminum price was low in 2015, and it takes 1.92 tons of alumina to produce 1 ton of electrolytic aluminum, so by contrast, the current enterprise products can not sell at a high price, but the cost is still high. Although there is a downward trend in the price of raw material alumina and pre-baked anode, the alumina market is greatly affected by the epidemic, the operating rate is insufficient, compared with aluminum enterprises is full production, the anti-drop factor is more obvious.
What worries Wang Wei even more is that once the electrolytic cell is stopped and reopened, the cost will be hundreds of thousands of yuan, so the production of electrolytic aluminum enterprises is normally continuing during the Spring Festival and the epidemic this year, but at present, the situation of resuming production downstream is not good, and the inventory problem in the industry is prominent. It is reported that the current domestic electrolytic aluminum inventory has reached 1.7 million tons, and in the previous two years when the market situation is good, this inventory value has dropped to less than 1 million tons.
"when aluminum prices hit a low in 2015, the state followed up with supply-side reforms, and aluminum prices rose. But at present, many large aluminum enterprises in China, including Shenhuo, Zhongfu and Weiqiao, are still investing in new production capacity. Although some enterprises in the industry have stopped production recently due to losses, they are all small production lines or enterprises with relatively high costs, and the overall scale of production suspension is only 300,000 to 400,000 tons. If the impact of the epidemic does not last long, everyone still wants to fight it as much as possible. At present, foreign markets are greatly affected by the epidemic. Although primary aluminum is not exported, the annual export volume of downstream aluminum products is four to five million tons. Aluminum export restrictions, coupled with the domestic downstream underemployment, inventory accumulation is a problem. " Wang Wei said.
During the interview, many people in the aluminum industry responded to the reporter of the Securities Times e company that although aluminum prices have fallen recently, enterprises in the downstream aluminum processing industry have also suffered substantial production losses in the near future. An unnamed person said that A-share listed aluminum processing company consumes 1000 tons of aluminum ingots per month. The aluminum ingots bought by the company at a high price a year ago have now fallen to about 11000 yuan / ton, and the products are facing sales bottlenecks, with an average loss of more than 20 million yuan a month.
In a state of loss, under the pressure of cash flow, many aluminum companies are hoarding goods to reduce losses, or to solve cash flow problems with product mortgages. At the same time, electrolytic aluminum enterprises in Guizhou, Yunnan and other places have begun to stop losses by overhauling tanks and reducing production.
At a time when global non-ferrous commodity prices are under pressure, the plight of the aluminum industry is not alone.
Since March, the main contract of Shanghai Nickel has fallen by more than 13%, the main contract of Shanghai lead has dropped nearly 12% for three consecutive trading days, and the main contract of Shanghai Tin has plunged from 135480 yuan / ton on March 12 to 104450 yuan / ton on March 20. the prices of many kinds of non-ferrous commodities have hit new lows in recent years.
"at present, the price of electrolytic copper in China is low in recent years. Shanghai copper was quoted at 35300 yuan / ton at the end of March, and the last time this price appeared was in 2016. " Wang Yi, an analyst at Zhuochuang Copper, told reporters that in the first quarter of this year, electrolytic copper enterprises used copper concentrates purchased in the fourth quarter of last year. At that time, the average purchase price of copper concentrate metal tons reached nearly 40000 yuan / ton. As a result, electrolytic copper enterprises are generally in a state of loss even if they do not take into account labor, depreciation and other costs.
She said that although the price of copper concentrate has fallen to 30000 yuan per metal ton, the survival space of copper enterprises in the later stage is still relatively narrow. The degree of external dependence of copper concentrate in China is more than 70%. At present, with the continuation of the epidemic in foreign countries, some large overseas mines have been forced to stop work, and copper enterprises are also facing the problem of limited import and transportation of copper concentrate. So copper concentrate production is sure to decline in 2020, so prices will remain strong, but the financial nature of copper is too strong and reacts quickly to negative news. The market was originally optimistic about the market in 2020, but affected by the epidemic, it is not optimistic about the future at present.
Like electrolytic aluminum, electrolytic copper enterprises are also faced with the problem of high shutdown costs, so during the Spring Festival and the epidemic this year, the upstream maintenance of production and downstream resumption of production is not good, resulting in the current domestic electrolytic copper inventory is also high.
Copper is easily oxidized and blackened, so usually a medium-sized enterprise has a normal inventory of less than 500t, but some time ago this inventory has been as high as 1000 tons. The inventory of large enterprises can be delivered to the Shanghai Stock Exchange, but as of March 23, the inventory of the previous period also reached 240000 tons, a recent high. " Wang Yi said.
In addition to non-ferrous commodities, the collapse of international crude oil prices halved in March has been transmitted to the entire chemical industry chain, and the cost collapse effect is obvious.
"China's resource endowment is rich in coal, poor in oil and less in gas. Ethylene glycol is mainly based on petroleum method in the world, and only coal-to-ethylene glycol has developed rapidly in China in recent years. Now the price of oil is declining, the cost of producing ethylene glycol by international petroleum method is very low, while the price of domestic coal is only slightly lower, so the disadvantage of enterprises is becoming more and more obvious. " Talking about the impact of the recent drop in international crude oil prices on the chemical industry, Gao Qiang (pseudonym), a relevant person in charge of a leading chemical listed company in Shandong, told reporters that the collapse in crude oil had a significant impact on the prices of many chemical products. There are many products of the company, and the degree of impact on each product is not the same, among which ethylene glycol is directly affected.
Since March, the main contract price of ethylene glycol in the domestic futures market has fallen from 4389 yuan / ton to the current lowest 2926 yuan / ton, a new low in nearly a decade. According to Gao Qiang, the basic cost of coal-to-ethylene glycol in China is about 5000 yuan / ton, and those with good cost control are also more than 4000 yuan. Therefore, under the current prices, the product prices of domestic coal-to-ethylene glycol enterprises are basically below the cost line, and the production loss is very obvious.
In addition to being affected by cost factors, the sluggish downstream demand for ethylene glycol is also one of the important factors that stimulate the price to continue to decline.
Jia Lingling, an analyst at Jinlianchuang, said that under the influence of the spread of the global epidemic, the export of the textile and clothing industry downstream of polyester is limited, and the demand pressure of the chemical fiber industry chain is transmitted step by step upward. Under the pessimistic expectations of market participants, the market is insufficient to buy gas, and the spot price of ethylene glycol continues to fall. At present, polyester factory inventory is high, and downstream demand recovery is beset with difficulties, polyester factory inventory is difficult to smoothly transfer downstream, it is expected that in April, polyester comprehensive operating rate may store some downward space, and as of March 26, East China ethylene glycol inventory has reached 1.006 million tons.
"now the impact of the epidemic has just begun, and there has not been a massive withdrawal of production capacity. However, since last year, the price of ethylene glycol has begun to decline, and some enterprises have previously been below the cost line. Because the investment cost is relatively high and has a certain technical content, the domestic coal-to-ethylene glycol is mainly state-owned enterprises and large enterprises, and it is not easy to reduce the supply end, and the change of production capacity in the later stage depends on the market situation. " Gao Qiang said that if the prices of products such as ethylene glycol continue to fall and the cash flow cannot be preserved, the more they produce, the more they lose, and the enterprises will consider the need to properly adjust the production schedule. At present, affected by the epidemic, it is difficult to get orders for foreign chemical products, and there are also cases in which signed orders are cancelled. At the same time, the domestic downstream resumption of production is delayed, terminal consumption is difficult to improve, thus the gradual transmission of upstream raw materials, the overall inventory of the industry is at a high level. "it is also difficult to increase inventory now. If it is a solid product, it can increase the inventory, but most of the chemical products are liquid, the requirements for storage containers and sites are higher, and the cost is difficult to afford. "
The MTO process of methanol to ethylene and propylene and the MTP process of methanol to propylene are important chemical technologies at present. Gao Qiang said in the interview, "because of the drop in oil prices, the domestic coal-to-olefin industry is basically unable to open, the economy is very poor, many coal-to-olefin projects have to stop production or switch production." Now the company methanol is basically self-production and self-use, the product profit is very thin, it is better to make other high value-added products. "
Since March, the price of methanol in the domestic futures market has fallen step by step, and is now approaching the lowest level since the end of 2015. However, due to the problem of increasing supply and weakening demand, the current domestic methanol market shows a situation that supply exceeds demand, and the price is difficult to be firm.
Although northwest companies did not offer a guided price last week, individual companies offered 1430 yuan per ton, and some small factories are even lower, basically hitting their lowest level since 2016, according to Zhang Xiaoyan, an analyst at Jinlianchuang. With the current new low frequency of global methanol prices, upstream production enterprises are facing increasingly prominent problems from the cost end. After the complete cost of enterprises has been broken, the marginal benefits of production enterprises in some areas have also been touched, or even broken.
There are not a few chemical products whose recent prices have broken through the new lows in recent years.
In mid-late March, xylene negotiations in East China once fell to around 3600 yuan / ton, falling below the low of 4025 yuan / ton on October 28,2008, and hitting the all-time low of 3380 yuan / ton on April 22,2003.
As the outer disk of pure benzene continued to plummet last week, the listing price of Sinopec pure benzene was reduced to 2900 yuan / ton, and the decline in the pure benzene market widened, dragging down the crude benzene market, which hit a 10-year low.
As of April 1st, the price of the main PTA contract 2009 in the domestic futures market fell to 3248 yuan / ton, which is far lower than the low of 4586 yuan / ton set in 2008. In the spot market, according to the price monitoring of the business society, as of March 27th, the average price in the PTA market was 3326 yuan / ton, down 49.71% from the same period last year.
Compared with the characteristics that non-ferrous and chemical products are significantly affected by the shocks of the international bulk market, black products seem to be able to enjoy the obvious improvement of the epidemic situation in China because the supply and demand are mostly concentrated in the domestic market.
"at the beginning of the domestic epidemic, the company's production and sales were temporarily suspended or delayed, but now they have all returned to normal, and downstream enterprise orders are also being shipped in an orderly manner, and downstream demand has performed well in terms of volume and price this year." Talking about the supply and demand situation of the domestic steel market since the epidemic, the relevant person in charge of a large special steel production enterprise in Northwest China communicated with a reporter from the Securities Times e Company that domestic steel prices fell to a certain extent in the first quarter, but recently, with the resumption of production in the upper and lower reaches of the industrial chain, the overall supply and demand has been alleviated.
Indeed, the overall trend of black in the domestic commodity market has been stable since the Spring Festival. Take iron ore as an example, the main iron ore contract fell as low as 569.5 yuan / ton after the Spring Festival, but then fluctuated higher, hitting a stage high of 692 yuan / ton in mid-March. The main contract of coking coal also showed an upward trend after the Spring Festival this year, from 1158 yuan / ton to nearly 1300 yuan / ton in mid-March.
However, it is worth noting that according to the statistics of the China Iron and Steel Association, the steel inventory of iron and steel enterprises in early March 2020 was 21.4087 million tons, an increase of 923900 tons, or 4.51 percent, over the previous decade; and an increase of 11.8762 million tons, or 124.59 percent, over the beginning of the year.
"recently, the international situation has deteriorated too fast, there are few opportunities in the steel market in the second quarter, and there are great downside risks for raw materials such as iron ore and coke." Zeng Jiesheng, an analyst at OYE Cloud Merchants, is not optimistic about the trend of black products. He told the Securities Times e that the prices of black products are really strong relative to the trend of global commodities. This is mainly due to insufficient domestic steel production cuts, constraints on raw material supply and transportation, and recent market expectations for stable infrastructure growth, and traders and terminals have replenished their inventories. It should be said that the impact of changes in the international situation on domestic demand and exports has not been reflected, but it is expected that the follow-up negative effects will gradually become prominent.
He said that the recent overseas outbreaks have had some impact on ore mining and shipping, with a relatively large impact on Brazil, which has led to increased market bullish expectations of iron ore prices in the short term. In fact, overseas demand for iron ore will soon decline, and supply will exceed demand.
Yu Mingjing, an iron ore analyst at Zhuochuang, said that there are greater downside risks in mineral prices in the second and third quarters. First of all, although Brazilian shipments are still at a low level, Australian shipments have rebounded to a high level, and Australian shipments are expected to increase in the second quarter. Secondly, the overseas epidemic has led to more production suspension and reduction of steel companies in Europe, Japan and South Korea, while the production reduction of the automobile industry has also led to a cliff decline in terminal demand, so it has a greater impact on iron ore demand. It is expected that it will be difficult for overseas countries to fully control the epidemic in the second quarter, and the impact on iron ore demand is likely to last until the end of the third quarter. Thirdly, the demand for overseas iron ore is likely to decline in the second and third quarters, more surplus iron ore resources will flow into China, and the global iron ore will change from shortage to surplus pattern.
In this regard, Cheng Xiaoyong, director of Baocheng Futures Finance Research Institute, also holds the same view. He said that the current relatively strong prices of black goods are mainly due to the expected support of domestic infrastructure, but we think there will be a process of making up for the decline behind the black series. Because at present, the problem of export restrictions, including auto parts and household appliance materials, has just begun, and some lagging impacts have not yet emerged.
Recently, a number of well-known international car companies, including Mercedes-Benz, BMW and Volkswagen, have announced the suspension of production in some factories in Europe and the United States. Chen Shihua, deputy secretary general of the China Association of Automobile Manufacturers, told the media that the impact of the overseas epidemic on domestic automobile-related import and export business is relatively small in the near future, and if the epidemic continues to spread, more automobile brand factories will stop production, which may affect domestic automobile-related import and export business in the next few months.
Against this backdrop, Citi said in a recent report that it was prepared to see iron ore prices fall to $70 a tonne in the coming weeks. Despite various global outages to prevent and control outbreaks, iron ore supplies so far do not appear to have been affected, according to the report. However, due to increased supply and weak demand for steel end-use, the market will have a surplus of 12 million tons in the second quarter.
After five consecutive weeks of decline, the prices of US WTI crude oil and Brent crude oil have both fallen by more than 50 per cent since March, leaving the international commodity market in mourning. Although a series of economic stimulus policies, including unlimited QE in the United States, have been introduced one after another, under the background of the continuing COVID-19 epidemic overseas, commodity prices are still difficult to bottom out at present.
"with the Fed's unlimited provision of liquidity, the collapse in assets triggered by market liquidity has come to an end, but it is too early to talk about bottoming out." Cheng Xiaoyong, director of the Baocheng Futures Finance Research Institute, said in an interview with the Securities Times e Company that if the spread of the overseas epidemic cannot be changed for a long time, then it should not be ruled out that many countries will follow China's measures to restrict the movement of people and logistics one after another. it will also take longer, which is bound to have an impact on the global supply chain and lead to a global economic recession. Some major economies with poor economic foundation may continue to have negative GDP growth, which will further lead to a massive contraction in the overseas demand side of Chinese enterprises. Under the current circumstances, the decline in international demand has not yet bottomed out.
He said that on the one hand, the collapse of crude oil has caused the collapse of the cost of downstream commodities, on the other hand, there have been a large number of cancellation of overseas textile orders, terminal export restrictions may lead to a decline in upstream commodity prices. As many economic data are released late, there may be a downward blow to commodities once the data are released.
"to see whether the commodity has bottomed out, we need to consider a logical transmission process. After the decline in demand, the commodity market also needs to go through a period of inventory accumulation, even if the decline in demand bottoms out, the market still needs to remove inventory. At the same time, upstream production also needs to promote production reduction, otherwise the process of destocking will be very slow. According to past experience, even if downstream demand shrinks, upstream production will not be cut immediately, and companies will barely maintain it, so from a time point of view, it is not time for commodities to fall to the bottom. " Cheng Xiaoyong believes that the impact of this round of COVID-19 epidemic on the economy will far exceed that of the SARS period, and the negative impact on the bulk market will be more obvious. Because of the integration of the global supply chain, there is a problem in one link, and the demand cannot be transmitted. At present, the epidemic affects countries all over the world, and demand will pick up only when the epidemic does not worsen, national control measures are no longer increased, and economic activity recovers slowly.
In the view of Yang Delong, chief economist of Qianhai open source, the process of global commodity slump in the early stage is over, and there may be repeated shocks in the later stage.
"at present, the spread of the epidemic overseas is relatively serious, and the impact on the global economy is relatively great, so it still takes time to digest it." Yang Delong believes that the global financial market earthquake process will be completed in three stages, after the first stage of liquidity drying up, all including stocks, bonds, gold and commodity assets plummeted, the market has now entered the second stage. In the second stage, global central banks began to rescue the market, Euro
