[SMM Steel Market Morning News] The PBOC Suspends Treasury Bond Purchases, Increasing the Necessity of RRR Cuts, Possibly by Month-End.

Publicado: Jan 13, 2025 08:24

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[SMM Steel Market Morning Brief: PBOC Halts Treasury Purchases, Increasing Necessity for RRR Cuts, Possibly by Late January] A research report by Guosheng Securities pointed out that the PBOC's suspension of treasury purchase operations might be aimed at preventing the potential risk of excessively rapid interest rate declines and could also consider stabilizing the exchange rate. For the market, the resistance to bond yield adjustments will increase, especially for short-term yields. Looking ahead, monetary easing remains the main direction, and the PBOC will also "choose the right time for RRR cuts and interest rate cuts.

★ Macro ★
01 ★ 【National Commerce Work Conference Held in Beijing】
The National Commerce Work Conference was held in Beijing from January 11 to 12. The conference emphasized that in 2025, the national commerce system must consciously align its thoughts and actions with the decisions and deployments of the Central Committee, focusing on eight key tasks:
1. Promoting special actions to boost consumption, intensifying efforts to expand the implementation of trade-in policies for consumer goods. Innovating diversified consumption scenarios, expanding service consumption, developing digital consumption, accelerating the establishment of a high-standard market system, and improving the modern commercial circulation system.
2. Fully stabilizing foreign trade and promoting high-quality trade development. Accelerating the cultivation of new momentum for foreign trade, expanding cross-border e-commerce, developing green trade, and advancing trade digitization. Taking multiple measures to support enterprises in exploring diversified international markets, actively expanding imports, innovating and enhancing service trade, and developing digital trade.
3. Promoting the attraction of foreign investment to stabilize stock and expand increments, creating a world-class business environment. Expanding independent and unilateral openness in an orderly manner, continuously building the "Invest in China" brand, leveraging the role of national-level economic development zones as platforms for attracting investment, and strengthening service guarantees for foreign-funded enterprises.
4. Proactively aligning with international high-standard economic and trade rules and building high-level open platforms. Enhancing the quality and efficiency of pilot free trade zones and expanding reform task authorizations, optimizing the functions of open platforms, and improving the quality and effectiveness of exhibitions.
5. Promoting international cooperation in industry and supply chains, and improving the quality of outbound investment and cooperation. Deepening reforms in the outbound investment management system and improving overseas comprehensive service systems.
6. Strengthening pragmatic economic and trade cooperation and advancing high-quality Belt and Road Initiative projects. Improving economic and trade cooperation mechanisms, deepening "Silk Road E-commerce" cooperation, coordinating the promotion of landmark projects and "small but beautiful" livelihood projects, and balancing cooperation in traditional and emerging fields.
7. Actively participating in global economic governance and strengthening multilateral and bilateral regional economic and trade cooperation. Fully participating in WTO reforms, expanding a global network of high-standard free trade zones, and deepening bilateral economic and trade relations.
8. Preventing and mitigating major risks and resolutely safeguarding national security.

02 ★ 【Guosheng Securities: PBOC Pauses Government Bond Purchases, Increasing Necessity for RRR Cuts, Possibly by Month-End】
A research report by Guosheng Securities pointed out that the People's Bank of China (PBOC) has paused government bond purchase operations, possibly to prevent the potential risk of excessively rapid interest rate declines and to stabilize the exchange rate. For the market, the pressure on bond yield adjustments will increase, especially for short-term yields. Looking ahead, monetary easing remains the main direction, and the PBOC will "choose the right time for RRR cuts and interest rate cuts." In terms of timing, after pausing government bond purchases, the necessity for RRR cuts has further increased, possibly as early as the end of January, with interest rate cuts also expected to follow. For bonds, "adjustments present opportunities," and the bond bull market in 2025 remains promising, though volatility may increase. In the short term, focus on the pace of government bond issuance in January and the potential "opening surge" in credit.

★ Industry and Downstream ★
01 ★ 【Guangzhou's Second-Hand Residential Registrations Hit Three-Year High Last Year】
In 2024, with unprecedentedly relaxed home-buying policies, Guangzhou's second-hand residential transaction registrations reached a three-year high. According to data released by the Guangzhou Housing Policy Research Center under the Guangzhou Housing and Urban-Rural Development Bureau, a total of 96,016 second-hand residential transactions were registered in Guangzhou throughout 2024, up 10.4% YoY from 2023 and 43.5% YoY from 2022.

02 ★ 【New Home Market Transactions Continue to Rebound in Many Regions, Second-Hand Market Stabilization Evident】
Since October 2024, the real estate market has shown positive changes, halting declines and stabilizing. Entering 2025, field visits to various regions revealed that the real estate market continues this trend, maintaining a certain level of activity, with market confidence gradually recovering. According to statistics from Beijing Lianjia Research Institute, in December 2024, Beijing's new commercial residential transactions reached 5,186 units, up 6.7% YoY and 17.1% MoM, marking the highest monthly transaction level in 2024 and the first time monthly transactions exceeded 5,000 units in Beijing in 2024. In Shanghai, many sales offices have also seen a noticeable increase in customer visits recently. The recovery in the new home market has provided a good start for this year's real estate market. Since December 2024, second-hand housing transaction volumes in many regions have also continuously hit new highs, with markets in various regions remaining active and stabilization effects evident.

★ Other Hot Topics ★
⭕ US Steel Corporation stated that the Committee on Foreign Investment in the United States has approved extending the deadline for Nippon Steel to abandon its acquisition of US Steel from February 2 to June 18.
⭕ As of January 10, 21 steel mills have announced winter stockpiling policies. Among them, Zunyi Fuxin Special Steel has set a tentative winter stockpiling payment price of 3,500 yuan/mt, requiring a 30% prepayment of winter stockpiling funds within three days of reporting the order volume starting January 10.
⭕ Recently, a special high-temperature alloy deep processing project with an investment of 300 million yuan has been settled in Xisai Mountain. Once completed, the project is expected to produce approximately 2,000 mt of special high-temperature alloy rod (pipe) products annually, with an estimated annual revenue of 100 million yuan.
⭕ BYD, Leap Motor, Ankai Bus, and Geely Auto have all achieved over 100% of their 2024 annual targets, while 10 automakers have achieved 65%-95% of their annual targets.
⭕ 【Baltic Dry Bulk Freight Index Surges Due to Capesize Vessel Gains】
The Baltic Dry Bulk Freight Index surged 8% on Friday, driven by an increase in the Capesize Vessel Freight Index. The Baltic Dry Bulk Freight Index rose by 79 points or 8.15% to 1,048 points, while the Capesize Vessel Freight Index increased by 284 points to 1,448 points.

Declaração sobre a Fonte de Dados: Com exceção das informações publicamente disponíveis, todos os demais dados são processados pela SMM com base em informações publicamente disponíveis, comunicação de mercado e com base no modelo de base de dados interna da SMM. São apenas para referência e não constituem recomendações para a tomada de decisão.

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