Iron ore and A-share market weekly report and global capital market weekly report 20240115
Overall, looking at it
Looking ahead, the high port level is expected to marginally decrease, and domestic steel companies will further recover production, thus improving the overall fundamentals of iron ore. In addition, the expectation of steel companies' demand for iron ore to replenish inventory before the Spring Festival, it is expected that the iron ore price will remain supported in the short term, leading to continued high volatility in prices. $SSIF DCE Iron Ore Futures Index ETF (03047.HK)$
On the supply side
Global shipments totaled 26.91 million tons, a decrease of 6.57 million tons compared to the previous month. Among them, Australia shipped 16.98 million tons, a decrease of 1.14 million tons from the previous week, and Brazil shipped 4.18 million tons, an increase of 5.28 million tons from the previous week. Non-mainstream shipments totaled 5.75 million tons, an increase of 0.15 million tons compared to the previous week.
Affected by the FMG train derailment accident, global iron ore shipments in the first two weeks of January were lower than expected. However, after the derailment was resolved on January 3rd, FMG transportation has returned to normal. Non-mainstream mines are still maintaining a high level of shipments. Looking ahead, the weather at the West Australian shipping ports is stable, and there will be a significant rainfall in the southern and southeastern mining areas of Brazil in late January. Overall, global shipments are expected to slightly recover in the later period.
On the demand side
There were 247 steel mills with a blast furnace operating rate of 76.08%, an increase of 0.45% compared to the previous week and an increase of 0.4% compared to the same period last year. The blast furnace iron-making capacity utilization rate was 82.56%, an increase of 0.97% compared to the previous week and the same as the same period last year. The profitability of the steel mills was 26.84%, a decrease of 3.46% compared to the previous week and an increase of 3.9% compared to the same period last year. The average daily pig iron production was 2.2079 million tons, an increase of 0.0262 million tons compared to the previous week and a decrease of 0.0151 million tons compared to the same period last year.
Following the resumption of blast furnace production at the beginning of the year, pig iron production has increased as scheduled this week. According to the production plans for maintenance and resumption of steel companies, large steel enterprises in central and southern China are expected to resume production in the next 1-2 weeks, and it is expected that pig iron output will continue to increase.
As for inventory
• National steel mills' total imported iron ore inventory is 99.8149 million tons; the inventory of imported iron ore at 45 ports is 126.2111 million tons, an increase of 3.7636 million tons from the previous period; the daily port clearance volume is 3.13 million tons, an increase of 0.08 million tons.
Looking ahead, the high port level is expected to marginally decrease, and domestic steel companies will further recover production, thus improving the overall fundamentals of iron ore. In addition, the expectation of steel companies' demand for iron ore to replenish inventory before the Spring Festival, it is expected that the iron ore price will remain supported in the short term, leading to continued high volatility in prices. $SSIF DCE Iron Ore Futures Index ETF (03047.HK)$
On the supply side
Global shipments totaled 26.91 million tons, a decrease of 6.57 million tons compared to the previous month. Among them, Australia shipped 16.98 million tons, a decrease of 1.14 million tons from the previous week, and Brazil shipped 4.18 million tons, an increase of 5.28 million tons from the previous week. Non-mainstream shipments totaled 5.75 million tons, an increase of 0.15 million tons compared to the previous week.
Affected by the FMG train derailment accident, global iron ore shipments in the first two weeks of January were lower than expected. However, after the derailment was resolved on January 3rd, FMG transportation has returned to normal. Non-mainstream mines are still maintaining a high level of shipments. Looking ahead, the weather at the West Australian shipping ports is stable, and there will be a significant rainfall in the southern and southeastern mining areas of Brazil in late January. Overall, global shipments are expected to slightly recover in the later period.
On the demand side
There were 247 steel mills with a blast furnace operating rate of 76.08%, an increase of 0.45% compared to the previous week and an increase of 0.4% compared to the same period last year. The blast furnace iron-making capacity utilization rate was 82.56%, an increase of 0.97% compared to the previous week and the same as the same period last year. The profitability of the steel mills was 26.84%, a decrease of 3.46% compared to the previous week and an increase of 3.9% compared to the same period last year. The average daily pig iron production was 2.2079 million tons, an increase of 0.0262 million tons compared to the previous week and a decrease of 0.0151 million tons compared to the same period last year.
Following the resumption of blast furnace production at the beginning of the year, pig iron production has increased as scheduled this week. According to the production plans for maintenance and resumption of steel companies, large steel enterprises in central and southern China are expected to resume production in the next 1-2 weeks, and it is expected that pig iron output will continue to increase.
As for inventory
• National steel mills' total imported iron ore inventory is 99.8149 million tons; the inventory of imported iron ore at 45 ports is 126.2111 million tons, an increase of 3.7636 million tons from the previous period; the daily port clearance volume is 3.13 million tons, an increase of 0.08 million tons.
A-share weekly report for this week:
The characteristics of the financial data in December basically continue the situation in November. In terms of the total amount, new social financing has increased more than the same period last year, while loans have increased less, and monetary expansion has slowed down. Structurally, government departments are still the main factor contributing to the increase in social financing, while demand from the corporate and household sectors is relatively weak. The sustainable expansion of money and social financing in the future may still depend on policy efforts. From the data perspective, the new supplementary mortgage loans in December may not have been credited as credit in the same month, or may be converted into actual loans in January. Looking ahead, the base effect has a significant impact on the year-on-year growth rate, and it is important to pay more attention to the month-on-month growth of monetary credit and changes in interest rates.
In December 2023, new social financing increased by 1.94 trillion yuan, an increase of 616.9 billion yuan compared to the same period last year, which is roughly in line with our expectation of 2 trillion yuan. New RMB loans in December 2023 were 1.17 trillion yuan, an increase of 240.1 billion yuan less than the same period last year, which is roughly in line with our expectation of 1.1 trillion yuan. The year-on-year growth rate of M2 in December 2023 decreased from 10.0% in November to 9.7%, while the year-on-year growth rate of M1 remained at 1.3%.
From the demand side, financing by government departments is relatively strong, financing by the household sector remains relatively stable against a low base, and financing by the corporate sector is relatively weak. The sustainable expansion of monetary and social financing in the future may still depend on policy efforts. Net financing of government bonds in December was 927.9 billion yuan, an increase of 647 billion yuan compared to the same period last year, which is the main driving force supporting social financing.
The characteristics of the financial data in December basically continue the situation in November. In terms of the total amount, new social financing has increased more than the same period last year, while loans have increased less, and monetary expansion has slowed down. Structurally, government departments are still the main factor contributing to the increase in social financing, while demand from the corporate and household sectors is relatively weak. The sustainable expansion of money and social financing in the future may still depend on policy efforts. From the data perspective, the new supplementary mortgage loans in December may not have been credited as credit in the same month, or may be converted into actual loans in January. Looking ahead, the base effect has a significant impact on the year-on-year growth rate, and it is important to pay more attention to the month-on-month growth of monetary credit and changes in interest rates.
In December 2023, new social financing increased by 1.94 trillion yuan, an increase of 616.9 billion yuan compared to the same period last year, which is roughly in line with our expectation of 2 trillion yuan. New RMB loans in December 2023 were 1.17 trillion yuan, an increase of 240.1 billion yuan less than the same period last year, which is roughly in line with our expectation of 1.1 trillion yuan. The year-on-year growth rate of M2 in December 2023 decreased from 10.0% in November to 9.7%, while the year-on-year growth rate of M1 remained at 1.3%.
From the demand side, financing by government departments is relatively strong, financing by the household sector remains relatively stable against a low base, and financing by the corporate sector is relatively weak. The sustainable expansion of monetary and social financing in the future may still depend on policy efforts. Net financing of government bonds in December was 927.9 billion yuan, an increase of 647 billion yuan compared to the same period last year, which is the main driving force supporting social financing.
The net financing of the household sector in December 2023 was not particularly strong. The net financing of the household sector in December 2023 was 227.1 billion yuan, a slight increase of 46.9 billion yuan compared to the same period last year. New medium and long-term loans to households increased by 146.2 billion yuan, 40.3 billion yuan less than the same period in 2022. Net short-term loans to households increased by 75.9 billion yuan, 87.2 billion yuan more than the same period in 2022. However, the base for the net financing of the household sector in December 2022 was very low, a significant decrease of 196.3 billion yuan compared to December 2021, so the net financing of the household sector in December 2023 can only be seen as a slight improvement against a low base, and not particularly strong.
In December, financing in the corporate sector continued to be weak. In December, corporate sector financing was 579.3 billion yuan, a significant decrease of 218.4 billion yuan compared to the same period last year. Except for corporate bonds, financing from various channels has decreased significantly year-on-year. The strong performance of corporate short-term financing in November did not continue in December, with a net financing decrease of 100.7 billion yuan for corporate short-term loans and on-balance and off-balance sheet bills, a decrease of 118.3 billion yuan year-on-year. Long-term loans for enterprises in December increased by 861.2 billion yuan, a small increase of 349.8 billion yuan year-on-year, mainly due to the high base caused by the policy-oriented development financial tools in 2022. In addition, due to the continued slump in the stock market, the pace of equity financing for enterprises has clearly slowed down, with corporate equity financing in December being 50.8 billion yuan, a small increase of 93.5 billion yuan year-on-year.
The loan disbursement driven by the Supplementary Mortgage Loan (PSL) may not have taken effect in December, but gradually manifested from January. In December 2023, the net increase in PSL balance by the central bank was 350 billion yuan, an increase of 361.2 billion yuan compared to the same period in 2022. This type of funds is used to support the disbursement of long-term loans for enterprises. If this part forms loan disbursement in December 2023, the increase in long-term loans for enterprises may not be as weak as the actual data shows: an increase of 861.2 billion yuan in long-term loans for enterprises in December 2023, a decrease of 349.8 billion yuan compared to the same period last year. After entering January, we observed a rapid rise in bill rates, reaching the level of early 2023. This may be the accelerated disbursement of loans driven by the PSL implementation. $Ping An Bank (000001.SZ)$
Global capital market weekly report:
The US market was closed for the holiday. Japan continues to perform well. The People's Bank of China did not cut interest rates, but countered by injecting some money. Baidu's headline news related to artificial intelligence of the People's Liberation Army decreased by 11%, dragging down the Hang Seng Index by 25 basis points.
Apple, for the first time in many years, offered a discount of up to 500 yuan ($70) for its latest iPhone in China. Another attack by the Houthi rebels was thwarted overnight, but there was little change in oil prices. $Apple (AAPL.US)$
The US market was closed for the holiday. Japan continues to perform well. The People's Bank of China did not cut interest rates, but countered by injecting some money. Baidu's headline news related to artificial intelligence of the People's Liberation Army decreased by 11%, dragging down the Hang Seng Index by 25 basis points.
Apple, for the first time in many years, offered a discount of up to 500 yuan ($70) for its latest iPhone in China. Another attack by the Houthi rebels was thwarted overnight, but there was little change in oil prices. $Apple (AAPL.US)$
Atlanta Fed President Raphael Bostic has published some gradually hawkish comments in the Financial Times (admittedly, this is not much different from the previous call for an early end to rate hikes, but with a longer stance). If policymakers also lower interest rates, inflation may soon become more volatile.
The European Central Bank's speech emphasizes the need for sufficient data to make an interest rate cut decision before June (which will be a few months later than the market's already anticipated rate cut of 30 basis points in April), but moving too quickly may backfire.
After the release of last week's US PPI data, the preferred core PCE inflation indicator for the Fed may decline. Therefore, if the Fed decides to lower interest rates in March, there are not yet enough factors to prevent this move.
What I noticed is that longer-term inflation expectations have started to rise. Just think, if the Fed wants to adjust and reduce the uncertain inflation outcome (the US Congress debates the $70 billion fiscal expansion/tax cut may be in vain), then this is indeed the victim.
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