Home / Metal News / It is difficult to change the downward trend of PPI compared with the same period last year. Copper terminal demand has fallen back and there is a lack of upward momentum in recent years.

It is difficult to change the downward trend of PPI compared with the same period last year. Copper terminal demand has fallen back and there is a lack of upward momentum in recent years.

iconOct 16, 2018 16:57
Source:SMM

SMM October 16: this morning China PPI data released in September, the growth rate is in line with expectations. The year-on-year trend of PPI is down, which also means that the growth rate of corporate revenue and profits is facing a slowdown in the fourth quarter, especially the decline in profit growth is likely to be large. Non-ferrous metal prices were weak after the release of the data. SMM believes that for copper prices, the release of PPI data is more of an emotional impact, and the domestic economy is expected to be relatively weak to affect the consumption of electrolytic copper in the near future.

PPI rose 0.6 per cent in September from a month earlier, but the impact of a high base continued to fall back to 3.6 per cent year-on-year, while the price of means of production rose 4.6 per cent. From the industry point of view, the rise in international oil prices to promote oil, coal and other fuel processing industry prices expanded month-on-month, but non-ferrous smelting processing prices from down to higher, black gold smelting processing increases also fell.

Previously, PPI rose 4.1 per cent in August from a year earlier, and was expected to be 4 per cent, up from 4.6 per cent. CPI rose 2.3 per cent in August from a year earlier, and is expected to be 2.1 per cent, compared with a previous figure of 2.1 per cent.

Zhongtai Securities analysis said that in recent months supply-side production restrictions led to high commodity prices shock, but real estate, cars and other demand gradually fell, PPI year-on-year difficult to change the downward trend.

Changes in industrial producer prices on a month-to-month basis

From a year earlier, PPI rose 3.6 per cent, down 0.5 percentage points from the previous month.

Among them, the price of means of production rose 4.6 percent, down 0.6 percentage points from the previous month, mainly due to a high base of comparison in the same period last year; the price of means of living rose 0.8 percent, an increase of 0.1 percentage points over the previous month.

Among the major industries, the non-metallic mineral products industry rose 8.1 percent, down 0.9 percent from the previous month, while the ferrous metal smelting and Calendering industry rose 7.2 percent and fell 2.3 percent. The chemical raw materials and chemical products industry rose 7.0 percent, down 0.9 percent, and the coal mining and washing industry rose 3.6 percent, down 2.1 percent.

The combined impact of the four major industries on PPI growth fell by about 0.32 percentage points compared with the same period last year. The oil and gas mining industry rose 41.2 percent, up 1.6 percentage points from the previous month, while the oil, coal and other fuel processing industry rose 24.1 percent, an increase of 1.4 percentage points. In addition, the prices of non-ferrous metal smelting and Calendering industries changed from rising to falling, down 1.7%.

Among the purchase prices of industrial producers, the prices of construction materials and non-metals rose 10.0% compared with the same period last year, the prices of fuel power rose 9.2%, and the prices of ferrous metals rose 5.1%. The prices of non-ferrous metal materials and wires fell by 0.4%.

On a month-on-month basis, PPI rose 0.6 per cent, 0.2 percentage points higher than the previous month.

Among them, the price of means of production rose 0.7 percent, an increase of 0.2 percentage points over the previous month, and the price of means of living rose 0.1 percent, down 0.2 percentage points from the previous month.

The prices of non-ferrous metal smelting and Calendering industries changed from falling to rising, up 0.3%. Prices in ferrous metal smelting and Calendering industries rose 1.5 per cent, down 0.6 percentage points from the previous month.

Zhongtai Securities said that since October, oil prices have risen again, steel prices have leveled, coal prices have risen slightly, and forecast PPI to rise 0.3 percent from the previous month, but taking into account the high base factor, the forecast PPI fell further to 3.3 percent from the same period last year.

Guosheng Securities Analysis also shows that with the weak continuity of the month-on-month upward trend of PPI, it is expected to fall back in October from the previous month. This is mainly due to the fact that the month-on-month growth rate of the prices of the means of production in circulation in the last 30 years (from mid-September to early October) has slowed significantly to an average of 0.3%, compared with the previous average of 0.9%. However, the month-on-month increase in PPI means of livelihood has slowed significantly, and concerns about the transmission of PPI to CPI can be slowed down for a while. The decline in the trend of PPI compared with the same period last year also means that the growth rate of corporate revenue and profits is facing a slowdown in the fourth quarter, especially the decline in profit growth is likely to be large.

Zhang Huawei, copper analyst at Soochow Futures, pointed out that the decline in copper prices today was mainly due to concerns about China's economic growth and trade frictions between China and the United States. In recent months, supply-side production restrictions have led to high commodity prices, but real estate, cars and other demand gradually fell, PPI year-on-year difficult to change the downward trend. For copper, demand for end products such as cars and household appliances has gradually fallen, and copper prices lack the momentum to push up.

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