Iron Ore and A-share Market Weekly Report and Global Capital Market Weekly Report 20240115
Overall
• Looking ahead to the later stages, the high arrival level is expected to decline marginally, while domestic steel companies' production recovers further, resulting in a marginal improvement in overall ore fundamentals. Combined with expectations that steel companies are still expected to replenish iron ore stocks before the Spring Festival, it is expected that phased ore prices will still be supported, causing mineral prices to continue to fluctuate at a high level. $SSIF DCE Iron Ore Futures Index ETF(03047.HK$
On the supply side
• Global shipments of 26.91 million tons, a decrease of 6.57 million tons, of which Australia shipped 16.98 million tons, a decrease of 1.14 million tons over the previous week, Brazil shipped 4.18 million tons, an increase of 5.28 million tons over the previous month, and 5.75 million tons of non-mainstream shipments, an increase of 150,000 tons over the previous month.
• Affected by the FMG train derailment accident, global iron ore shipments fell short of expectations in the first two weeks of January, but after the derailment was resolved on January 3, FMG transportation has resumed, and non-mainstream mines are still maintaining a high level of shipment. In the later stages, the weather at Western Australia shipping ports is stable, and mining areas in southern and southeastern Brazil will have a significant rainfall process in late January. Overall, global shipments are expected to pick up slightly in the later stages.
Demand side
• The operating rate of blast furnaces in 247 steel mills was 76.08%, up 0.45% from last week, up 0.4% year on year; blast furnace iron production capacity utilization rate was 82.56%, up 0.97% month on month, flat% year on year; steel mill profit ratio was 26.84%, down 3.46% month on month, up 3.9% year on year; average daily iron and water output was 2.20,700 tons, up 262,000 tons year on month, down 151,000 tons year on year.
• Following the first resumption of blast furnace production at the beginning of the year, blast furnace iron production increased as scheduled this week, and according to the steel companies' inspection and restoration plans, in the next 1-2 weeks, large steel companies in central China and southern China will resume production. It is expected that iron and water production will continue to increase.
In terms of inventory
• The total stocks of iron ore imported from steel mills across the country were 998.14,900 tons; according to statistics, 45 ports imported iron ore stocks were 126.21,000 tons, an increase of 3.7636 million tons over the previous month; the average daily dredging volume was 3.13 million tons, an increase of 80,000 tons.
• Looking ahead to the later stages, the high arrival level is expected to decline marginally, while domestic steel companies' production recovers further, resulting in a marginal improvement in overall ore fundamentals. Combined with expectations that steel companies are still expected to replenish iron ore stocks before the Spring Festival, it is expected that phased ore prices will still be supported, causing mineral prices to continue to fluctuate at a high level. $SSIF DCE Iron Ore Futures Index ETF(03047.HK$
On the supply side
• Global shipments of 26.91 million tons, a decrease of 6.57 million tons, of which Australia shipped 16.98 million tons, a decrease of 1.14 million tons over the previous week, Brazil shipped 4.18 million tons, an increase of 5.28 million tons over the previous month, and 5.75 million tons of non-mainstream shipments, an increase of 150,000 tons over the previous month.
• Affected by the FMG train derailment accident, global iron ore shipments fell short of expectations in the first two weeks of January, but after the derailment was resolved on January 3, FMG transportation has resumed, and non-mainstream mines are still maintaining a high level of shipment. In the later stages, the weather at Western Australia shipping ports is stable, and mining areas in southern and southeastern Brazil will have a significant rainfall process in late January. Overall, global shipments are expected to pick up slightly in the later stages.
Demand side
• The operating rate of blast furnaces in 247 steel mills was 76.08%, up 0.45% from last week, up 0.4% year on year; blast furnace iron production capacity utilization rate was 82.56%, up 0.97% month on month, flat% year on year; steel mill profit ratio was 26.84%, down 3.46% month on month, up 3.9% year on year; average daily iron and water output was 2.20,700 tons, up 262,000 tons year on month, down 151,000 tons year on year.
• Following the first resumption of blast furnace production at the beginning of the year, blast furnace iron production increased as scheduled this week, and according to the steel companies' inspection and restoration plans, in the next 1-2 weeks, large steel companies in central China and southern China will resume production. It is expected that iron and water production will continue to increase.
In terms of inventory
• The total stocks of iron ore imported from steel mills across the country were 998.14,900 tons; according to statistics, 45 ports imported iron ore stocks were 126.21,000 tons, an increase of 3.7636 million tons over the previous month; the average daily dredging volume was 3.13 million tons, an increase of 80,000 tons.
This week's A-share weekly report:
The characteristics of the December financial data basically continued the November situation. In terms of total volume, new social finance increased year-on-year, loans increased less year-on-year, and monetary expansion slowed; from a structural point of view, government departments are still the most important factor in the increase in social finance. Demand from the corporate and residential sectors is weak, and the sustainable expansion of money and social finance may continue to depend on policy strength in the future. Judging from the data, the additional mortgage supplement loan in December may not have formed a credit in that month, or converted into actual loan investment in January. Looking ahead, the base figure has a big impact on the year-on-year growth rate. More attention should be paid to the month-on-month growth of monetary credit and changes in interest rates.
In December 2023, 1.94 trillion yuan was added in social finance, an increase of 616.9 billion yuan over the previous year, which is roughly in line with our forecast of 2.0 trillion yuan. In December 2023, RMB 1.17 trillion was added in loans, a year-on-year decrease of RMB 2401 billion, which is roughly in line with our forecast of RMB 1.1 trillion. The M2 year-on-year growth rate in December 2023 fell to 9.7% from 10.0% in November, and the M1 year-on-year growth rate remained flat at 1.3%.
From the demand side, government sector financing is strong. Under a low base, residential sector financing is generally flat, and corporate sector financing is weak. The sustainable expansion of monetary and social finance is likely to continue to depend on strong policies in the future. The net financing of government bonds in December was 927.9 billion yuan, an increase of 647 billion yuan over the previous year, which is the main driving force supporting social finance.
The characteristics of the December financial data basically continued the November situation. In terms of total volume, new social finance increased year-on-year, loans increased less year-on-year, and monetary expansion slowed; from a structural point of view, government departments are still the most important factor in the increase in social finance. Demand from the corporate and residential sectors is weak, and the sustainable expansion of money and social finance may continue to depend on policy strength in the future. Judging from the data, the additional mortgage supplement loan in December may not have formed a credit in that month, or converted into actual loan investment in January. Looking ahead, the base figure has a big impact on the year-on-year growth rate. More attention should be paid to the month-on-month growth of monetary credit and changes in interest rates.
In December 2023, 1.94 trillion yuan was added in social finance, an increase of 616.9 billion yuan over the previous year, which is roughly in line with our forecast of 2.0 trillion yuan. In December 2023, RMB 1.17 trillion was added in loans, a year-on-year decrease of RMB 2401 billion, which is roughly in line with our forecast of RMB 1.1 trillion. The M2 year-on-year growth rate in December 2023 fell to 9.7% from 10.0% in November, and the M1 year-on-year growth rate remained flat at 1.3%.
From the demand side, government sector financing is strong. Under a low base, residential sector financing is generally flat, and corporate sector financing is weak. The sustainable expansion of monetary and social finance is likely to continue to depend on strong policies in the future. The net financing of government bonds in December was 927.9 billion yuan, an increase of 647 billion yuan over the previous year, which is the main driving force supporting social finance.
The net financing of the residential sector in December was not very strong. In December 2023, the net financing of the residential sector was 227.1 billion yuan, a slight increase of 46.9 billion yuan over the same period last year, including 146.2 billion yuan in medium- and long-term loans for residents, a decrease of 40.3 billion yuan over the same period in 2022. Short-term loans to residents increased net by 75.9 billion yuan, an increase of 87.2 billion yuan over the same period in 2022. However, the net financing base of the residential sector in December 2022 was very low, a sharp decrease of 1963 billion yuan compared to December 2021. Therefore, the net financing of the residential sector in December 2023 can only be counted as a slight improvement under a low base, which is not strong.
Corporate sector financing continued to be weak in December. In December, the corporate sector's financing was 579.3 billion yuan, a sharp decrease of 218.4 billion yuan over the previous year. With the exception of corporate bonds, financing from all channels declined markedly from the same period last year. The strength of short-term corporate financing in November did not continue in December. In December, short-term corporate loans and domestic and external notes added total net financing of 10.7 billion yuan, a year-on-year decrease of 118.3 billion yuan. Medium- and long-term corporate loans increased by 861.2 billion yuan in December, a year-on-year decrease of 349.8 billion yuan, mainly due to the high base brought about by policy development financial instruments in 2022. Furthermore, due to the continued downturn in the stock market, the pace of equity financing has clearly slowed down. In December, corporate equity financing was 50.8 billion yuan, a year-on-year decrease of 93.5 billion yuan.
The loan investment driven by mortgage supplementary loans (PSL) may not have been implemented in December, but gradually showed results starting in January. In December 2023, the central bank increased its PSL balance by 350 billion yuan, an increase of 361.2 billion yuan over the same period in 2022. This type of capital is used to support medium- and long-term corporate loan investments. If this portion were to be invested in loans in December 2023, medium- to long-term corporate loans might not be as weak as actual data shows: in December 2023, an additional 861.2 billion yuan of medium- and long-term corporate loans were added, which is a decrease of 349.8 billion yuan compared to the same period last year. After entering January, we observed that interest rates on notes rose rapidly. The rate of increase and the level of interest rates on notes reached the level of the beginning of 2023. It is likely that the implementation of PSL will drive accelerated credit investment. $Ping An Bank(000001.SZ$
Global Capital Markets Weekly Report:
The US market is closed for the holidays. Japan continues to excel. The People's Bank of China did not cut interest rates, but fought back by injecting some currency. Baidu's headlines relating to PLA artificial intelligence were -11%, dragging down the Hang Seng Index by -25 basis points.
For the first time in years, Apple is offering a discount of up to 500 yuan ($70) on its latest iPhone in China. Another attack by the Houthis was thwarted overnight, but oil prices remained largely unchanged. $Apple(AAPL.US$
The US market is closed for the holidays. Japan continues to excel. The People's Bank of China did not cut interest rates, but fought back by injecting some currency. Baidu's headlines relating to PLA artificial intelligence were -11%, dragging down the Hang Seng Index by -25 basis points.
For the first time in years, Apple is offering a discount of up to 500 yuan ($70) on its latest iPhone in China. Another attack by the Houthis was thwarted overnight, but oil prices remained largely unchanged. $Apple(AAPL.US$
Atlanta Federal Reserve Chairman Rafael Bostic published some gradually hawkish comments in the Financial Times (admittedly, this is not much different from calling for an early end to interest rate hikes but holding on for a longer period of time). If policymakers also cut interest rates, inflation may “pull back” very quickly.
The ECB's statement emphasized that sufficient data should be obtained before June to make a decision to cut interest rates (this will be a few months later than the 30 basis point rate cut already anticipated by the market), but too fast may be self-defeating.
After the US PPI data was released last week, the core PCE inflation index preferred by the Federal Reserve is likely to fall. Therefore, if the Federal Reserve decides to cut interest rates in March, there are not enough factors to stop this move so far.
What I've noticed is that longer-term inflation expectations have begun to rise. If you think about it, the Federal Reserve wants to adjust and cut inflation results that have yet to be determined (the US Congress debating $70 billion fiscal expansion/tax cuts may not help), then this is really a victim.
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