In March 2020, the commodity price index hit a 32-month low, and there is still room for further decline in the latter part of the year.

n March 2020, Shanghai Steel's China Commodity Price Index (MYBC) reached 894.12, the lowest since August 2017, down 4.85% from the previous month and 9.71% from the previous year. With the support of various domestic policies, the real economy resumed work and production in March, but it still did not return to the pre-epidemic level. In addition, the spread of the epidemic abroad affected external demand, and the whole commodity industry was under pressure of low demand and high inventory, forcing it to cut prices to remove inventory.

Macro analysis: Internationally, under the influence of the epidemic, the Markit composite PMI in the euro zone fell to 29.7 in March, a record low. U.S. Markit Manufacturing PMI in March recorded 48.5, the lowest in more than a decade. In the United States, the number of jobless claims reached a record high of 6.468 million at the beginning of the week on March 28. Unemployment in Spain rose by 300,000 in March, the largest increase in history. With the outbreak of foreign epidemics, PMI, employment and inflation in Europe and the United States may continue to deteriorate in the future. In March, 40 or so central banks around the world cut interest rates, adopted radical monetary easing measures and more active fiscal policies to stabilize market confidence. On the domestic front, China's manufacturing PMI rose sharply to 52.0% and non-manufacturing PMI rose sharply to 52.3% in March, mainly because the domestic epidemic prevention and control has made important achievements in stages, supporting enterprises to resume production quickly, but the resumption of production by enterprises has not yet returned to the normal level before the epidemic. According to the data, the average opening rate of industrial enterprises at the end of March was 98.6%, the resumption rate of small and medium-sized enterprises reached 76%, and the resumption rate of housing construction and municipal infrastructure projects nationwide exceeded 85% in early April. China has ample room for macro-control policies and will further support the recovery and development of the real economy. The central bank decided to lower the targeted approval for small and medium-sized banks in April, releasing a total of about 400 billion yuan of long-term funds. In the first quarter, all parts of the country issued 1.08 trillion yuan of new special bonds, an increase of 63% year-on-year. The Ministry of Commerce will push relevant places to relax or cancel the car purchase restriction measures, etc. Breakdown of industries: On a month-on-month basis, the price indexes of 7 industries including steel, energy, nonferrous metals, basic chemicals, rubber and plastics, building materials and textile fell in March. The price index of agricultural and sideline industries was basically the same, while the price index of paper industry rose. On a year-on-year basis, the price indexes of 7 industries including steel, energy, nonferrous metals, basic chemical industry, rubber and plastics, paper making and textile fell in March. The price index of building materials and agricultural and sideline industries rose.

In March, the steel price index was 870.70, down 2.15% from the previous month and 7.77% from the previous year. As of the 30th, the steel price in March went out of the trend of bottoming out, rebounding and falling again. The comprehensive price of steel fell 28% from the end of last month. According to the variety, the price of rebar rose 68% (the average thread price in March fell 43% from February), the hot rolling price fell 99%, and the cold rolling price fell 239. The US dollar index of 62% imported iron ore fell 1, the coke price index fell 127 and the scrap price index fell 117, basically in line with expectations. Looking ahead to the steel market in April, although the fundamental pressure will be eased somewhat, with the accumulation of external profits and the transmission of rapid exceeding expectations, although steel prices have the impulse to rebound upward, they are more likely to face downward pressure. Although the performance of different regions and varieties will be differentiated, there is still room for interactive downward movement.

In March, the energy price index was 1088.92, down 5.78% from the previous month and 9.54% from the previous year. International oil prices continued to fall in March amid the global epidemic of newly crowned pneumonia and the "price war" between Saudi Arabia and Russia. It is expected that the international crude oil market will still face great pressure in April. The US$ 20 defense line will not be able to withstand the negative impact, and the international oil price will remain under pressure. WTI is expected to operate in the range of US$ 17-25/barrel and Brent in the range of US$ 18-27/barrel. At present, domestic coal enterprises have completely entered the normal production operation, and the coal supply has maintained a loose trend. In coking coal, the optimization of domestic coal mine production capacity and the elimination of excess production capacity of washing and dressing enterprises have been carried out in an orderly manner. Policies under the domestic epidemic situation have formed favorable support for the production development. It is expected that the "two sessions" in April will have little impact on the production of coal enterprises, and the supply of coking coal will maintain a relatively balanced trend. In terms of price, the mainstream price of raw coal from Mongolia 5 is 950-970 yuan/ton, while the price of clean coal from Mongolia 5 is about 1050-1100 yuan/ton. In the short term, with the resumption of customs clearance at Mongolian ports, the supply of Mongolian coal has become more relaxed and the domestic supply and demand situation has been superimposed. It is expected that the price of Mongolian coal will still have downward space in the short term.

In March, the non-ferrous price index was 472.43, down 10.76% from the previous month and 19.81% from the previous year. In the domestic spot market, Shanghai, a key city for spot trading of non-ferrous metals, is taken as an example. Among the basic metals, the price of 1# electrolytic copper was 39,450 yuan/ton at the end of March and 44,700 yuan/ton at the end of February. A00 electrolytic aluminum was reported at 11490 yuan/ton at the end of March and 13100 yuan/ton at the end of February. 1# lead ingot was reported at 14,100 yuan/ton at the end of March and 14,450 yuan/ton at the end of February. The 0# zinc ingot was reported at 15,280 yuan/ton at the end of March and 16,040 yuan/ton at the end of February. The price of 1# tin ingot is 124500 yuan/ton at the end of March and 137500 yuan/ton at the end of February. # electrolytic nickel reported 94880 yuan/ton at the end of March and 101640 yuan/ton at the end of February. The accelerated outbreak of overseas epidemics and the intensive policies of various countries to release a large amount of water to stimulate the economy are wrestling with each other. The relay of the economic stimulus package at the meeting of the Political Bureau of China has injected confidence into the market. However, the negative impact of the epidemic and the bad economic data in Europe and the United States will regain the upper hand during the subsequent policy window period. Fundamentally, domestic production is temporarily stable, and domestic consumption on the demand side is beginning to improve. The policy stimulus package of the Politburo meeting of the Central Committee, including increasing deficit ratio and increasing the scale of local special debts, are all guiding the domestic economic recovery. At the micro level, the operating rate of downstream processing enterprises has increased steadily, but due to the higher risk of black swans, they are more cautious in accepting orders. Small and medium-sized enterprises face financial pressure. In the short term, central bank stimulus policies have been announced one after another, but the accelerated epidemic situation is still a lingering negative. It is expected that non-ferrous metal prices will remain relatively empty in the short term, and there will be a rebound momentum after the inflection point of overseas epidemic situation occurs.

In March, the basic chemical price index was 809.08, down 3.51% from the previous month and 10.84% from the previous year. In March, methanol in East China dropped mainly. Against the background of global public health events, global downstream demand is weak, and methanol prices in East China market have dropped rapidly, even falling below 1700 yuan/ton within a month, with the largest drop reaching around 280 yuan/ton. In addition to the impact of weak market fundamentals, OPEC's cut-off agreement broke down at the beginning of the month, followed by a price war on crude oil, which led to a drop in the main contracts of methanol futures. During the month, the demand for replenishment was supported by some bargain-hunting and replenishment in the market. The demand for replenishment was only slightly general, mainly for arbitrage and speculation. Talks were slightly active in the far month. Since the absolute price was in the stage of bottom-building, the basis stabilized mainly in the last ten days. In Changzhou and Zhangjiagang area, some of the early set of disk sources actively shipped after a strong basis, while some of the other sources were fully exchanged with Taicang, making Changzhou's price also at a relatively low level. In the latter half of the year, under the influence of the drop in mainland prices, the arbitrage space between domestic sources and ports was opened for a short time, which had an obvious impact on port sources. The port's plan for the coming April-May has been fully met, and even some reservoir areas have been fully met in June. Port tank capacity is obviously strained. However, under the influence of weak global demand, domestic import volume is still expected to increase. Longzhong expects the eastern China market or low-level shocks to be mainly repaired in April, but the absolute price is low, which does not rule out the possibility of a narrow rebound.

In March, the rubber and plastic price index was 667.10, down 2.95% from the previous month and 16.38% from the previous year. In March, the prices of natural rubber RU futures (9680,-870,-8.25%) and NR futures (7765, -1230, -13.67%) dropped significantly, with RU futures' main contract changed from RU2005 to RU2009. Natural rubber futures showed a downward trend in March. The escalating global public health incidents and the sharp drop in international crude oil dragged down the downward trend of bulk commodities in the month. Domestic natural rubber stocks are still in an upward cycle. The market mentality is pessimistic. Domestic tire sales are rising slowly while export sales are expected to shrink. Under multiple factors, the main natural rubber contracts once fell. Although the escalation of public health incidents in Thailand and Malaysia and the postponement of rubber tapping in domestic Yunnan production areas have a tightening expectation on domestic supply, the short-term boosting effect is limited and it is difficult to change the downward trend.

In March, the building materials price index was 1443.17, down 4.63% from the previous month and up 1.51% from the previous year. In March, the national cement price continued to decline, and the start-up speed in demand was slow. However, manufacturers at the supply side began to open kilns one after another. The supply of cement increased significantly. The clinker stock was high and the market supply exceeded the demand. During the epidemic prevention and control period (February 27-June 30), freeways were exempted from vehicle tolls and the cement transportation radius was increased. As a result, the market competition in some regions was fierce and the cement price dropped sharply. In April, as the epidemic situation in China has been clearly brought under control, the resumption of work on the project is accelerated, and demand is expected to continue to recover, with prices likely to bottom out and rebound. In March, the paper price index was 906.91, up 7.93% from the previous month and down 17.99% from the previous year. In March, China's paper industry rose first and then fell. The export market fell due to the weakening of domestic economic activity and the fermentation of international public health incidents. The news of the withdrawal of foreign trade wrapping paper triggered panic in the market. The price of wrapping paper continued to fall and the demand in the downstream region shrank more than expected. The price of wood pulp is low, while the price of domestic waste continues to fall. It is estimated that the price of corrugated and paperboard will be weak in April. At present, the domestic and foreign terminal demand for corrugated cardboard is in the recovery stage, with limited short-term capacity and slightly higher stock of paper enterprises. At the same time, the cost of raw material waste paper is limited, and the industry has a strong bearish attitude. News of bad news is on the high side. Longzhong Information believes that there is still some room for the price of short-term corrugated cardboard to fall, but with the gradual recovery of domestic demand, there is limited room for downward movement. In March, the textile price index was 772.02, down 5.62% from the previous month and 22.34% from the previous year. PTA Market Weak Adjustment in March. At the beginning of the month, PTA market stabilized after a small rise, OPEC+ may further reduce production, and international oil prices closed down after rising. PTA market showed a slight shock after pulling up. Downstream polyester plants have been restarted one after another, but recent peripheral public health incidents have spread and macro mood swings are quite large. In the month, OPEC+ production reduction meeting broke down, Saudi Arabia increased its daily production capacity to 10-12 million barrels per day, crude oil price war began, adding to the negative effects of global public health events, international oil prices plummeted, PTA futures fell several times, and the current price hit a record low since PTA was listed. Although Fuhai has produced 4.5 million tons, Hengli Petrochemical 2.2 million tons and Xinfengming 2.2 million tons of plants have entered parking, it is difficult to save PTA's vulnerable situation. The resumption of work in downstream polyester and terminal markets is limited. Although polyester load is slowly recovering, PTA supply and demand fundamentals are still weak under the situation that PTA social inventory has not been greatly removed. The pattern of supply and demand is still difficult to change, and the PTA supply continues to increase at the end of March and the beginning of April. The PTA processing range has been greatly expanded. All of these are bad for the market and the weak pattern of PTA is difficult to alleviate. Aftermarket still needs to continue to pay attention to the trend of crude oil and the recovery progress of downstream demand. In March, the agricultural and sideline price index was 1248.69, down 0.02% from the previous month and up 3.87% from the previous year. In March, the price of soybean meal further increased sharply. On the one hand, the arrival volume of soybean in March decreased month on month. On the other hand, due to the continuous spread of overseas epidemics, the market was worried about the blocking of soybean transportation in soybean producing areas in South America. During the period when domestic stocks of imported soybean and soybean meal were extremely low, the price of soybean meal rose sharply. The futures price was once close to 3,000 yuan/ton, and the spot price generally exceeded 3,100 yuan/ton nationwide. Judging from the later period, the price of soybean meal will have limited room to rise and will remain high and volatile overall. But long-term soybean meal prices will face the possibility of falling. First of all, the stock of domestic imported soybeans and soybean meal has remained at the lowest level in history. Currently, the stock of imported soybeans is only 2.102 million tons. The short-term soybean meal supply has remained tight, which has strongly supported the spot price of soybean meal in some regions. However, on the other hand, due to the current lucrative domestic soybean imports, upstream oil plants have increased the pace of buying ships from abroad, and the normal supply will gradually increase in the later period, thus suppressing the unilateral upward movement of soybean meal. Late overseas outbreaks, especially in soybean producing areas in Brazil and Argentina, still need to be closely watched. Macroeconomic index forecast: According to historical data observation, the change of MyBCIC is generally 1-2 months ahead of PPI, especially on the change of inflection point, even more sensitive than PPI, and the correlation between PPI and CPI non-food price trend is relatively high, which can provide forecast and warning for the operation of national economy. In March, the global public health events escalated and the international crude oil slump dragged down the downward trend of commodities. For this reason, about 40 central banks around the world cut interest rates, adopted radical monetary easing measures and more active fiscal policies to stabilize market confidence. Looking forward to April, the domestic epidemic situation control has achieved phased results and there is still room for growth in the demand for commodities. However, external profits continue to accumulate. Prices in most industries such as steel and nonferrous metals are still under heavy pressure. Prices in a few industries such as cement and soybean meal are likely to rebound. It is expected that the commodity price index will still have room for decline in April.