The central bank once again beyond all expectations RRR, March 1st, general down financial institutions RMB deposit reserve ratio by 0.5 percentage points. The year 2015, a total of 5 times the central bank RRR cut interest rates 5 times, steel prices are up and down, not necessarily linked. The central bank released 6000-7000 billion yuan of liquidity, what impact will the late steel market?
In 2015 the central bank cut interest rates drop quasi and steel price changes
First, the central bank RRR in favor of funds into the real economy, whether it is construction or real estate industry will further benefit. In 2016, China's fiscal policy will be more active, moderately loose monetary policy continued, bank lending to infrastructure projects are stepping up efforts. At the same time, February 2, the central bank issued a document, non purchase of cities in the first suite Shoufu ratio can be appropriately reduced to 20%; February 19, the Ministry of Finance and adjustment real estate transactions deed tax business tax preferential policies; the RRR, further easing of the residents of the housing mortgage loan amount, conducive to the inventory of the property market.
Secondly, as liquidity tends to loose expected return bond rate will be reduced. In March 1st, the Shanghai interbank offered rate (Shibor) showed that the short-term interest rate, in addition to the 14 day Shibor rose yesterday, most of the varieties are different rate fell. Overnight Shibor fell 3.90 basis points to 1.9680%; a month Shibor fell 0.50 basis points to 2.7950%. Long term interest rates in 3 months, Shibor reported 2.8835%, down 1.55 basis points; 6 months Shibor at 3.0100%, down 1.20 basis points. The domestic large and medium-sized steel enterprises in addition to obtain bank credit, but also through in the inter-bank bond market issuance of bills to supplement working capital, financing costs are expected to be reduced, and the intense situation of small steel mills and traders funds hardbreak.
Again, with further easing of monetary policy, short-term RMB exchange rate pressure. However, the Chinese government on the one hand there is no devaluation of the yuan to expand exports will. On the other hand, a moderately loose monetary policy is conducive to steady economic growth, easing pressure on capital outflows. Overall, is expected to drop quasi limited impact on the exchange rate, the RMB exchange rate will remain stable on the export competitiveness of China's steel improving co..
Although the central mom has some good news on the steel market, but also to see the RRR is to hedge the base currency decline (1, February led to a sharp decline in foreign exchange continued) and downtown pressure on the economy, does not mean high water, and the stimulating effect on the real economy will become increasingly weak. In February 2016 Chinese manufacturing PMI hit more than three year low of 49%, production and new orders index fell further.
Overall, because after the downstream steel demand is slowly released, steel prices rose after temporarily into the consolidation phase. However, with gradual release of peak demand, steel market supply and demand too much pressure and policy easing, market confidence has not been frustrated is expected in central bank reduced quasi guided, short-term steel prices is expected to the strong side of the consolidation. Considering the steel production power is also enhanced, the author is not optimistic about the steel prices rose.