Policy signals are curbed, and the popularity of the bulk commodity market drops

Commodity market began to "fever"

Recently, after the regulatory authorities successively issued policy signals to curb the excessive rise of commodities, the commodity market began to cool down.

Following the general decline in the previous few days, the domestic commodity futures market continued the general decline on May 20. As of the close of the afternoon of May 20, thermal coal and coking coal fell to the limit, iron ore fell more than 5%, and coke, rebar, etc. fell more than 4%. Affected by the futures market, A-share cyclical stocks fell sharply, and industry sectors such as coal and steel weakened.

According to industry insiders, with the further implementation of relevant policies and measures, it is expected that the commodity market will gradually return to a rational stage in the future.

Stock traders sharply cut prices and sell goods

Bao Musong, general manager of Shanghai Xingang Industrial Co., Ltd., told a reporter from Shanghai Securities News that due to clear policy signals, downstream construction sites believe that steel prices will return to rationality, and the current wait-and-see sentiment is strong.

A person in charge of a steel trading company in Linping, Hangzhou, told reporters that the price of steel had been soaring before, and dealers were also involved in a lot of speculation in addition to normal purchases from steel mills. Recently, the steel market has noticed the various signals issued by the supervisory authorities, and speculators are like "horrified birds" and have cut prices for shipments.

Earlier crazy scrap copper prices also appeared weak. According to data from the ZZ91 Recycling Network, the average price of major scrap copper in Jiangsu, Zhejiang and Shanghai was 65,000 CNY/ton on May 20, a cumulative drop of 4% in the past two days.

A person in charge of a scrap metal recycling base in Foshan, Guangdong, said that previous recyclers and friends around were hoarding a batch of scrap copper and not selling them, hoping to sell them when the price is higher. Recently, the surrounding scrap copper quotations have become more rational, and the previous “increasing day by day” situation no longer exists.

The enthusiasm of the bull hype begins to fade

Regarding the cause of the sharp drop in black products, Sun Hui, director of the Nishimoto Shinkansen Research Center, told reporters that the regulators have recently intensively voiced to "cool down" commodities. Black futures have fallen sharply for several days. Decreased prices and dumped goods, resulting in a sharp drop in spot prices.

The Mandarin Commodity Index, which reflects the price of a basket of commodity futures, showed that the index fell 3.4% in the past two trading days.

Looking ahead, Sun Hui said that the southern region will enter the rainy season in June and July, and the low season of steel consumption will come. Coupled with the correct guidance of domestic macroeconomic policies, it is difficult for steel prices to experience a pattern of "rapid ups and downs", which is expected to be reasonable. The interval is mainly adjusted by shocks.

Derivatives "escort" the operation of listed companies

Industry experts said that large fluctuations in commodity prices are detrimental to the upstream and downstream of the industry chain. When the prices of commodities as raw materials rise, downstream processing companies often face dilemmas such as reduced profits, declining consumer demand, and reduced orders. When the prices of bulk commodities fall sharply, traders and distributors in the middle of the industrial chain are very likely to encounter problems such as order defaults, inventory backlogs, and profit losses.

So, how can we avoid the risk of price fluctuations and achieve stable business operations? Listed companies have turned their attention to derivatives. Flush data shows that since this year, more than 80 listed companies have issued hedging-related announcements.

"After years of development, China's futures market has entered a relatively mature stage. The domestic futures market has a rich supply of products, which can provide enterprises with efficient and low-cost hedging tools." An executive of a large futures company in East China said, "In In many respects, China’s futures market has achieved the layout of the entire industry chain, and relevant companies can conveniently hedge raw materials and products, lock in processing profits, and avoid market risks."