Bet PPI Touches The Bottom Line Of Industrial Products, Short-Term Support

Recently, industrial, chemical, metal and paper industries have been raising prices for products.

Analysts pointed out that at present there are funds to bet on the bottom of PPI, chemical and black line of commodities support.

Eager to raise prices

The recent increase in the price of commodities in the bulk market has once again ignited a "little flame". On the one hand, the performance of agricultural products is expected to improve under the expectation of the turning point of the pig cycle. On the other hand, the rebound of crude oil and the improvement of the external situation also provide an opportunity for the price increase of chemical products and some metal products.

"The demand for speeding up chemical industry in the downstream industry is obvious. The expected growth of infrastructure and real estate, household appliances, textile and garment industry is still good. The growth rate of most sub industries in the supply side is below 6%, and the supply and demand of related chemicals is booming.

Driven by the rise of crude oil, some of the best chemicals in the stock market have taken the lead.

CICC chemical industry research reported that the price of chemical products is expected to continue to rebound.

Coincidentally, in March, pulp and paper enterprises issued a letter to increase the price of cultural paper, leading paper enterprises have even started issuing April letters of increase.

Some metal companies have also increased their prices.

"This may be a sign that PPI is hitting the bottom and stabilizing."

Industry insiders say that behind the recent rise in price themes, funds have already begun to bet on PPI's bottom.

According to the data released by the National Bureau of statistics, the PPI growth rate in February 2019 was unchanged from the previous value, lower than the market forecast of 0.2%, and the ring fell 4 months in a row.

In terms of industries, the price of oil, black metal and petroleum processing increased by 5%, 1.8% and 0.9% respectively, and the price of computer communications, paper making, non-metallic mineral products and chemical raw materials decreased by 0.8%, 0.6%, 0.5% and 0.5% respectively.

Judging from the futures market, Wenhua financial statistics show that as of February, the main contract futures of rebar, iron ore and coking coal have been rising for three consecutive months, of which the increase in steel ore is even more significant.

Wenhua industrial and commercial industrial futures price index rose by 6.25% and 1.48% respectively in 1 and February.

China Merchants Bank reported that high frequency data showed that commodity prices remained stable, and if commodity prices did not decline substantially, PPI would rebound.

But from the base point of view, the second, third quarter of 2018 is the high price of commodity prices, so in the second, third quarter of this year, PPI will probably fall into the deflation zone.

However, with the increase of policy countercyclical adjustment, the possibility of continued deflation of PPI is less likely.

Commodities pick up or promote PPI "tail".

According to insiders, in February, the prices of construction materials and non-metallic materials rose by 5.5% compared with the prices of industrial producers, while ferrous metal materials prices increased by 1.6%.

Zhuochuang analysis shows that the main reason for the rise of the ferrous metal mining industry and the year-on-year increase is the broad rise in the prices of raw materials and finished steel products in February. Iron ore and scrap steel are used as raw materials, and the prices in February are higher than those in January.

The main reason for the black metal industry's general price rise in February is that the Brazil River Valley mining accident caused the market to reduce the capacity of iron ore production by about 40 million tons.

Especially after the Spring Festival, black futures rose and the spot market quickly pulled up.

"But in the end, due to the limited release of the rigid demand, the social inventory is on the high side, which restricts the upward price of the finished steel products. Due to the fall in demand and shipment pressure, the price index of the black metal industry ex factory price is limited, especially the ferrous metal smelting and the pressure reducing industry prices are still at a low level compared to the same period last year."

Zhuo Chuang information analysis believes that after the stock market operation in February, the contradiction between supply and demand in the domestic steel market gradually eased in March, and the pressure of shipment was not great. In March, steel prices were expected to go lower and higher. In March, the factory price index of black metal industry continued to rise, and the increase was more than February.

As demand rebounded, commodity prices rebounded and PPI rose steadily.

In terms of international commodity prices, the CRB spot index has maintained a short-term volatility pattern and is in a downward trend from a long cycle.

China Airlines securities analyst Fu said that external prices will have a downward impact on domestic PPI.

This year's steady growth policy is to reduce tax as the starting point. In the short term, it will not cause rapid increase in demand for industrial products. It is difficult to see significant fluctuations in the PPI ratio.

The price of industrial products is relatively stable in recent years. Combined with the "tail up" factor, it is expected that PPI will rebound in the 3 year and April.

However, after May, the big probability dropped, and PPI is expected to decrease significantly over the same period last year.

Short term support for chemical and black systems

From the investment point of view, which commodities, especially industrial goods futures, will have prominent opportunities in the future?

In terms of chemical industry, CITIC futures pointed out that from the perspective of the oil industry chain, the recent trend of oil prices is strong, and the cost of supporting asphalt and fuel oil continues to be the strongest.

Olefin industry chain, LLDPE, PP and PVC after the short-term basis repair, there is a certain selling pressure, especially the high level of PVC, there is a certain pressure in the short term. Therefore, in the short term with the support of crude oil, the disk may only follow cautiously. In the future, attention should be paid to the recovery of demand and overhaul, and the overall focus is expected to gradually rise.

In addition, the aromatics industry chain, after the recent PTA callback, the industry chain price gap is being repaired, polyester profits stabilized and rebounded, and the market outlook is concerned about the support of demand recovery.

In 2019, PTA was short of incremental supply. After the continuous delivery of polyester, the supply is still expected to be tight again, and the long term is still optimistic about PTA price.

In terms of black line, SDIC pointed out that the demand for steel has been revived, and the supply and demand side has been stable.

From 1-2 month real estate data, sales downturn led to the growth rate of new construction dropped, but investment is still relatively strong, building materials demand in the short term no worries.

It is expected that the short term oscillation will be strong and the uplink resistance will remain strong.

"The tail factor may drive the PPI to rebound in the short term, but in the context of the global economic slowdown, commodity prices are strong and lack fundamental support."

Fu says.