Less Action On PPI, Three Kinds Of Commodities Should Not Be Done.

From historical experience, there is a clear correlation between PPI and commodity market returns.

On the current trend of PPI, analysts pointed out that in May, the CRB industrial raw material spot index quickly descended, and PPI has been rebounded for two consecutive months. The follow-up or action is insufficient. At this stage, the performance of power coal, crude oil and copper will be under pressure.

PPI cycle and commodity performance

PPI is known as the producer price index of industrial producers, which is an index for measuring the trend and degree of change of the prices of industrial products. It covers more than 20000 kinds of industrial product prices. As an important index for measuring inflation, the change is an important reference for domestic commodities investment.

CITIC futures analyst Yin Dan and Jiang Jing pointed out that from the two dimensions of the PPI cycle, the different stages and the correlation of commodity yields, the performance of commodities in different PPI cycles was found. In the upstream stage of PPI, the middle reaches of the crude oil industry chain had high correlation with PPI, such as asphalt, methanol and fuel oil; in the PPI downlink stage, the upstream energy and metal industry varieties were highly correlated with PPI, such as power coal, crude oil and copper; in the PPI peak stage, the correlation of steam coal, methanol, iron ore and hot coil was high; in the PPI trough stage, the correlation between asphalt, coking coal coke, hot coil, thread and PTA was high.

There is no significant correlation between black series iron ore, coking coal coke, rebar and hot coil in the trend cycle of PPI, but shows strong correlation in the peak or trough period.

According to the latest data in April, PPI rose 0.90% in April, higher than the previous value (+0.40%), and higher than market expectations (+0.60%).

The PPI rose 0.3% in April, rising for the two consecutive month, or nearly 6 month high.

Among them, production materials and living materials increased by 0.4 and 0.2 percentage points respectively.

Judging from the changes in major industries, China Aviation securities analyst Fu pointed out that the oil and natural gas extraction industry (+3.6%) rose higher than the annulus, but the increase was narrower than the previous value (+5.6%). Ferrous metal smelting and calendering processing industry rose 2.1%, or 1 percentage points larger than the previous value; coal mining and washing industry decreased by 0.5%, the decline was 0.4 percentage points higher than the previous value; the non-metallic mineral products industry rose 0.1%.

Three varieties have short opportunities.

Looking forward to the trend of PPI, Fu pointed out that from the April Nanhua industrial index and the CRB industrial raw material spot index, both of them are in a state of shock.

Entering the May, the CRB industrial raw material spot index quickly descended, or indicated that PPI's subsequent upward momentum was insufficient.

"It is expected that the rising trend of PPI in the first quarter will be difficult to sustain. In the future, it will once again turn downward and go down into a negative range.

The internal reason is that the lagging factors of last year made the PPI down in the two or three quarter, and this year's new stimulus factors will weaken the effect of the first quarter economic data, which will not support the demand for a big rebound. The external reason is that the weakening of economic momentum will negatively affect the investment expectation of the enterprises.

Yin Dan, Jiang Jing analysis, based on the two or three quarter of this year's PPI downward judgment, the corresponding commodity investment strategy recommendations are: short of steam coal, crude oil, copper.

However, it reminds us that we should also pay attention to factors that may lead to early PPI rebound or slow slope, including loose monetary policy, new commodity demand and imported inflation.