On June 4, the International Monetary Research Institute of Renmin University of China and the Department of Monetary and Finance of Renmin University of China jointly organized the big financial thought salon-"Learning from the spirit of the two sessions, and finance assists the 14th Five-Year Plan" series of salons online. At the seminar, Guo Biao, deputy director of the Department of Applied Finance of the School of Finance, Renmin University of China and a researcher at the Institute of International Monetary Studies, released a theme report entitled "The Causes and Enlightenment of the Fundamental Factors of Commodity Price Rising".
The report believes that the current increase in commodity prices mainly includes the following reasons.
First, the supply and demand gap caused by the epidemic has pushed up the prices of bulk commodities. After the spread of the new crown pneumonia vaccine, the economies represented by China and the United States have recovered to a large extent in terms of demand, while the major commodity suppliers such as Brazil, Chile, and India are still in the midst of the epidemic crisis, and the supply-side growth rate has not The rapid growth of the demand side has brought about a large gap in supply and demand.
Second, the combination of monetary easing in the U.S. dollar and fiscal stimulus plan has led to an increase in commodity prices. The prices of many commodities are priced in U.S. dollars. The over-issue of U.S. dollars leads to the rise of commodity prices. After the depreciation of the U.S. dollar, it is necessary to spend more U.S. dollars to buy commodities.
The third is the short-term impact of the carbon neutral policy. The industries where carbon peaks and carbon neutral policies have a greater impact on carbon emissions are power generation and steel. As the two industries with the highest carbon emissions in my country, the power generation and steel industries are the focus of achieving the goal of reducing carbon emissions. It is necessary to reduce production and limit production and shrink production capacity expectations. However, the demand is increasing, the supply of the main supplier countries is experiencing problems, and the economic recovery has exceeded expectations. With the addition of carbon neutrality and production reduction expectations, the supply is even more unbalanced.
The fourth is other macro factors, such as my country's economic "dual cycle" pattern.
To this end, the report recommends that the price discovery mechanism in the derivatives market should be improved, and basis trading should be vigorously developed; supply flexibility should be increased; and the role of RMB exchange rate regulation should be brought into play. The exchange can pay close attention to the market trend before the expiration of the main contract in the near future. If the supply and demand are still imbalanced, the margin can be increased to prevent possible forced position situations.
Hu Yuyue, director of the Securities and Futures Research Institute of Beijing Technology and Business University, said that commodity prices have seen a strong rise since the second half of last year, and there has been a wave of strong rises since the beginning of this year. The main features are as follows: First, this round of bulk commodity price increases is comprehensive. Agricultural products, black, non-ferrous metals, and energy and chemical products have risen astonishingly. Second, these four types of products have all been inverted. Spot and futures are inverted, and overseas and domestic are inverted. There has even been a situation where foreign spot prices are higher than domestic futures prices. Third, it is mainly due to the increase in varieties that are relatively highly dependent on foreign countries and have relatively large imports.
Hu Yuyue believes that the combined effects of ample liquidity, expected rising demand and supply shocks have led to this round of commodity price increases. Loose liquidity has fully revealed the financial attributes of bulk commodities. From the perspective of fundamentals and the global industrial chain, developed countries and China are in the lower reaches of the global industrial chain and belong to the demand side; while low- and middle-income countries and Australia and other countries are mostly in the upper reaches of the industrial chain and belong to the supply side. At present, the epidemic situation in emerging economies is out of control and vaccination is lagging behind that of developed countries, which will lead to different stages of economic restart, which will form a mismatch between supply and demand for a period of time, which will directly promote the rise of commodity prices. Insufficient supply on the supply side and rising demand expectations have caused a mismatch between supply and demand, which has impacted the entire industrial chain of bulk commodities from upstream to downstream.
Tang Ke, director of the Institute of Economics, School of Social Sciences, Tsinghua University, said that the three major attributes of supply, demand, and finance determine the prices of bulk commodities. The initial increase in commodity prices was due to insufficient supply caused by the epidemic. With the promotion of vaccines, the economic recovery has made supply recovery unable to keep up with demand growth, and the resulting mismatch between supply and demand has led to cyclical fluctuations in commodity prices. "In addition to supply and demand factors, the prices of domestic commodities actually include certain financial speculation factors. Our calculations have found that this factor has not yet brought a significant impact, but there is no guarantee that it will not have a significant impact in the future. We want to prevent it in advance."
Judging the future, Hu Yuyue said that after this round of commodity prices are adjusted, the rise will continue for a period of time, and it is unlikely that a new high will be set. "First of all, this round of rising is caused by fundamentals and excess liquidity. If the contradiction between supply and demand in fundamentals is not effectively resolved in the short term or in the future, the pattern and trend of price increases may not be completely changed. , Don’t worry too much about this round of commodity rises being transmitted to the downstream. The fall in pork prices makes the CPI hovering at a low level.”
"This round of bulk commodity price increases is more due to fundamental factors. Relatively speaking, prices will not return to normal quickly, because the production process of bulk commodities requires sufficient time, that is, for the countries currently affected by the production side, It's difficult to recover quickly." Tang Ke said.