Pay close attention to the pullback in commodity prices

Recently, global commodity prices have fallen across the board, and prices from energy to industrial raw materials to agricultural products have all experienced corrections to varying degrees
.
The price of copper has fallen by more than 30% from the high since the outbreak of the new crown pneumonia epidemic, falling back to the level at the end of 2020, and the price of crude oil has also fallen by more than 10%
.

The aggressive interest rate hike by the Federal Reserve is the trigger for the current round of commodity price declines.
Tightening liquidity and rapidly rising capital costs have caused speculative funds to flow out of commodity markets
.
The market's pessimistic expectations of global economic growth have become the main driving force for price declines.
Due to the current high inflation in major economies such as Europe and the United States, the market's pessimistic expectations of future demand for commodities
.
Commodity prices ended their sustained upward momentum and increased volatility due to a combination of two factors
.

Due to China's high dependence on foreign commodities, the real economy has suffered from rising costs since the second half of 2020
.
On the one hand, with the return of overseas orders to China, the demand for the manufacturing industry has picked up, and the order volume of processing and manufacturing enterprises has continued to increase, but a small part of the profits that should have been obtained by the manufacturing industry has been eroded by the rise in the prices of energy, raw materials and freight
.
On the other hand, the rising prices of energy and agricultural products have increased the living cost of domestic residents, reducing the actual consumption capacity to a certain extent, and the repeated outbreak of the new crown pneumonia has affected the willingness of domestic residents to go out to eat and travel, and demand for the service industry.
form a certain impact
.

With the correction of commodity prices, the cost pressure of the manufacturing industry is expected to be alleviated to a certain extent, and the upward pressure on CPI may be further alleviated, which brings more room for domestic monetary and fiscal policies to stabilize growth
.
However, we must also be soberly aware that, on the one hand, even if there is a significant correction in commodity prices, because the current round of rising has lasted for two years, the current commodity prices are still at a high level in general, and the cost pressure of the real economy has not been fundamentally eased.
On the other hand, the current global economic growth is weak and the terminal demand is not strong, which may lead to a decline in the prices of industrial products and consumer goods.
That is to say, the prices of products and services may also decline at the same time as costs, making it difficult for the real economy to make profits.
Significant improvement
.

Looking ahead, with the marginal improvement in economic indicators such as domestic PMI and the added value of industrial enterprises above designated size since May, it is expected that domestic demand for bulk commodities will recover significantly in the third and fourth quarters of this year
.
In the international bulk commodity market, China's market is relatively large and its demand accounts for a relatively high proportion, which has always been one of the important supports for international bulk commodity prices in terms of supply and demand
.
Due to China's high dependence on foreign commodities and the lack of international pricing power, with the gradual recovery of China's economic growth, commodity prices may still rebound
.

Therefore, the current correction of commodity prices cannot be taken lightly, and the domestic work of ensuring supply and stabilizing prices must continue to work
.
On the one hand, relevant departments should continue to strengthen the monitoring of the operation status of the futures and spot markets, standardize the circulation order, and crack down on capital speculation; We will continue to maintain value, lock in costs and risks, and strive to expand profitability in the second half of the year
.