Source: Bloomberg
The inventory of key raw materials in China is increasing, indicating that economic activities are still weak and cannot digest excess supply.These excess supply is lowered the price from steel to soybeans.
The government's growth goal this year seems to be more out of reach, which is not good news for drilling merchants, mining companies and farmers in the world's largest commodity importer.Inventory blowouts may show that some traders have been affected by poor economic performance since the end of the epidemic.Others may underestimate China's transformation from the old economy to the new economy.
But these inventory also proves that the Chinese government attaches great importance to ensuring that domestic factories and residents will never lack food and lack of grain.Research from JPMorgan Chase shows that China has more than 90%of the world's visible copper inventory, nearly a quarter of crude oil inventory, and more than half of the major crops such as corn and wheat.
Therefore, although consumption and industrial activities are not cheerful, Chinese state -owned importers may not care too much about whether the timing of purchasing is suitable, because their task is to ensure that under any circumstances, the country has sufficient reserves.
Coal
The panic of power shortage in 2021 and 2022 triggered the re -examining of China's energy security, especially the supply around major fuel coal.The response in Beijing is to increase the output and import volume to a record level.
But this coincides with the sluggish demand of the industry, and the sharp increase in clean energy power generation has almost met all the needs of China's consumption growth.As a result, according to data supplier China Coal Resource, the coal inventory has risen from less than 90 million tons at the end of 2021 to 635 million tons of less than 635 million tons at the end of June.
crude oil
The Petroleum market is also facing similar problems -economic weakness and increased domestic output, and as the pace of decarburization accelerates, demand has declined for a long time.Refiners were forced to reduce the operating rate and imports have also decreased.
According to the data of Vortexa LTD., although the land crude oil inventory in July reached a ten -month high of more than 1 billion barrels, it was still lower than the peak of last summer.If the enterprise adopts a cautious attitude and uses sufficient supply to meet the seasonal growth of the autumn demand, this may indicate that the import volume will be further declined.
"In view of the uncertain prospects of demand, if the refinery needs to increase the operating rate when the demand is rising during the season, it may choose to consume commercial oil tank inventory instead of increasing purchase," Energy Aspects LTD. Analyst Jianan Sun.
Soybean meal
Since this year, China Feed Factory has been purchasing cheap Brazilian soybeans, but found that the demand for downstream of livestock feed is not as expected as expected.As the economic slowdown inhibits meat consumption, China's pig surviving column has decreased.
This makes the soybean meal inventory reach the highest level since 2016 and promote the local price of this feed raw material to fall to a four -year low.This is a bad news for American farmers who are preparing for the US export season.At the same time, this has also triggered a rare shift in trade flow. This has been repeated in other markets such as copper, that is, China exports a large number of goods to its usual imports to digest excess domestic supply.
Iron ore
As the real estate industry continues to drag the demand for construction, the Chinese steel industry is in crisis.The port inventory of the key raw material iron ore has soared to the highest level of history.
Although there are preliminary signs that the market is recovering from the low summer downturn, the profit margin of hot -rolled coils used to manufacture car body and home appliances is close to the record low.If a steel mill wants to survive the downturn, it may have to continue to reduce production, which means that the demand for this steelmaking raw material will be further reduced.
