CCTV, Beijing, August 20 (Reporter Lv Hongqiao) Commodity prices have fallen sharply recently. On August 19, the prices of crude oil, iron ore, non-ferrous metals and other bulk commodity futures generally fell, with the prices of many varieties falling by 2%- Between 7%. Since August, the bulk commodity market has been operating weakly, especially the prices of crude oil and iron ore have fallen sharply. What is the reason for the drop in commodity prices this round? Is it cyclical?
On August 19, the price of London copper futures fell below US$9,000 per ton, or 1.63%, a record low in nearly four months. Tin futures prices fell as much as 6.4%. Prices of zinc, lead, and nickel have also generally fallen. In addition to non-ferrous metals, New York and Brent crude oil futures prices also fell more than 2%. In addition, iron ore futures prices fell by more than 7%, a record low during the year. What are the reasons for the general decline in commodity prices? According to Xu Gao, assistant to the president and chief economist of Bank of China Securities, on the one hand, there is a change in US dollar liquidity expectations. Xu Gao said: “The Fed has made it clear that it will begin to reduce the scale of bond purchases this year. It will begin almost at the end of this year and will basically end its bond purchases by the middle of next year. This indicates that the Fed’s loose monetary policy is turning. So in this case For the prospect of liquidity, the market also feels that it may gradually tighten, so it has formed a relatively obvious downward pressure on the bulk commodity market.”
On the other hand, the global epidemic continues to spread, and the pressure of epidemic prevention in some countries has risen sharply, which has also caused the market to bearish future economic trends and commodity demand.
For the domestic market, there are also policy factors for the rational decline of commodity prices. Taking non-ferrous metals as an example, the National Development and Reform Commission, together with the State Bureau of Grain and Material Reserves, recently released two batches of national reserves of copper, aluminum and zinc, totaling 270,000 tons. Meng Wei, a spokesman for the National Development and Reform Commission, said that from the market response, relevant companies actively participated in the bidding, and the transaction price was lower than the market price. Meng Wei said: “At present, the two rounds of reserve investment have basically achieved the expected goal. It has been widely reported by all sectors of society that the reserve investment reflects the country’s determination and confidence to ensure the supply of bulk commodities and price stability, guides price expectations, and eases some industries. Pressure on the cost of raw materials for enterprises.”
In addition, for different types of commodities, price changes are also affected by their respective supply and demand factors. According to Xu Xiangchun, chief information officer of Shanghai Iron and Steel Federation, taking iron ore as an example, demand is highly dependent on the Chinese market and is prone to large fluctuations. Xu Xiangchun said: “Iron ore has risen too high in the early stage, reaching more than 220 US dollars per ton at the highest level, which is far beyond the highest level in history. On the one hand, as China reduces steel production, the demand for iron ore has been compressed. On the second aspect, due to the recent weakening of economic data, the demand for steel will be further compressed, and this factor has further exacerbated the decline in iron ore prices.”
In fact, since mid-July, the price of iron ore has fallen by more than 30%, showing a trend of downward trend. International oil prices have also seen continuous declines, with a drop of nearly 15% since August. So, has the commodity market entered a cyclical downward channel? Experts believe that it is still uncertain. In Xu Gao’s view, commodity prices are more likely to fluctuate in the future. Xu Gao said: “The overall situation should still be volatile, because on the one hand, liquidity may be gradually withdrawing, on the other hand, in the second half of the Chinese economy, we expect some proactive fiscal policies will come out, which will drive China’s demand for bulk commodities. , So I think the bulk of commodities fluctuates as a whole.”Return to Sohu to see more
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