11/27/2021 Financial News In China: Steel Prices Plummeted By 20% In One Month; RMB Hits A New Low For Half A Month

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1.Central Bank Of China Accepts The Third Personal Credit Investigation License Application

The People’s Bank of China said on Friday that it accepts applications for personal credit investigation by Qiantang Credit Information Co., Ltd.  Among the company’s major shareholders, Zhejiang Tourism Investment Group and Ant Group both hold 35% of the shares, and each has two shareholder directors.  This will also be China’s third personal credit investigation license after Baixing Credit Investigation and Park Dao Credit Investigation.  According to the announcement published on the central bank’s website, Qiantang’s credit reporting shareholders also include Chuanhua Group, Hangzhou Financial Investment Group, Zhejiang Electronic Port Company, and Hangzhou Xishu Enterprise Management Partnership. The shareholding ratios are 7%, 6.5%, 6.5%, and 10%.  The company has a registered capital of RMB 1 billion and its place of registration is Hangzhou, Zhejiang Province. Reuters exclusively reported in early September that several government-backed companies will hold a large number of shares in an important asset of Ant Group for the first time as part of the regulatory-driven rectification of Ant Group after its IPO was suspended in November last year.  Help Ant to restart the IPO.

2.RMB Hits A New Low For Half A Month

The RMB against the U.S. dollar spot closed down on Friday and hit a new low in half a month, while the central parity rose by 44 points.  Traders said that South Africa’s reappearance of the CCP virus variants has caused market risk aversion and the renminbi is also slightly under pressure, but short-term foreign exchange settlement demand may be difficult to subside. The renminbi is likely to continue to fluctuate within the range, and the renminbi CFETS index is expected to further expand its gains. They also said that the Fed may accelerate the reduction of debt purchases and raise interest rates ahead of schedule, and the US dollar may follow up. If the overseas epidemic continues to aggravate, the external market risk sentiment may worsen, and pay attention to the progress of the epidemic. Analysts also pointed out that the Fed has recently changed its tone and may accelerate its balance sheet reduction and early interest rate hikes in the future. The U.S. dollar will strengthen further, the U.S. Treasury yield curve has room for further increase, and the narrowing of China-U.S. interest rates may accelerate, which will also help limit  The renminbi is strong, “the RMB exchange rate will be adjusted in the range of 6.35-6.40.”

3.Steel Prices Plummeted By 20% In One Month

Recently, due to the weakening of demand for building materials, steel prices have begun to fall.  As of the close of trading on November 26, the main price of futures rebar was 4104 yuan per ton, a drop of more than 1,700 yuan from the October high.  Due to the recent price fall too fast, the downstream home appliance and machinery manufacturing companies are more inclined to buy steel in small quantities many times.  From January to October, the floor space of new housing starts fell by 7.7%.  Under the background of the shortage of funds of real estate developers and the poor performance of the real estate market, the terminal demand for steel has declined to a certain extent.  The National Development and Reform Commission and the Ministry of Industry and Information Technology proposed in the first half of the year to ensure a year-on-year decline in national crude steel output in 2021, which requires steel companies to control output.  Crude steel output of many steel mills has declined since July, but the decline in demand is far more serious than the decline in supply, which has caused recent pressure on steel mills.

4.Meituan’s Third Quarter Loss Was Greater Than Expected

Chinese food delivery platform Meituan released its third-quarter results on Friday. The third-quarter non-IFRS net loss was 5.53 billion yuan, which was higher than previous market expectations.  The net profit for the same period last year was 2.05 billion yuan.  In the third quarter, the company’s segmented business revenue growth rate slowed down year-on-year, and the number of transaction users increased by more than 40% to a new high during the same period.  Anti-monopoly regulatory penalties have been implemented. Meituan’s net profit during the performance period was a loss of 2.1 billion yuan, compared with a gain of 472 million yuan in the same period last year; the company’s net loss in the third quarter was 99.9 billion yuan. The performance report also showed that the company’s third-quarter revenue was 48.83 billion yuan, higher than the previous market expectation, a year-on-year increase of 37.9%.  The revenue growth of Meituan’s segmented business-food delivery, hotel travel and new retail all slowed year-on-year, but the number of transaction users increased by more than 40% year-on-year, reaching a new high of approximately 670 million.

5.Amendments To The Implementation Regulations Of The Tobacco Monopoly Law

The State Council of the Communist Party of China issued a decision on amending the “Regulations for the Implementation of the Tobacco Monopoly Law of the People’s Republic of China.”  The CCP said that in order to strengthen the supervision of new tobacco products such as e-cigarettes, the State Council decided to make the following amendments to the “Regulations for the Implementation of the Tobacco Monopoly Law of the People’s Republic of China.”  One article is added as Article 65: “E-cigarettes and other new tobacco products shall be implemented with reference to the relevant regulations on cigarettes in this Regulation.” This decision shall come into force on the date of promulgation. The “Tobacco Monopoly Law of the People’s Republic of China” refers to the CCP’s monopoly and unified management system for the production, sales, and import and export of tobacco monopoly products.

6.The Shanghai Composite Index Closed Lower And Rose Slightly On A Weekly Basis

The Shanghai Composite Index of China’s stock market closed lower on Friday for the second consecutive day, but it rose slightly on the weekly basis.  Rare earth permanent magnet concept stocks were boosted by favorable policy news and led the non-ferrous sector to lead gains this week.  The Shanghai Composite Index closed down 0.6% to 3,564.09 points and rose 0.1% this week.  The Shanghai and Shenzhen 300 Index closed down 0.7% and fell 0.6% this week.  The Shenzhen Growth Enterprise Market Index closed down 0.2% and rose 1.5% this week.  The 50 component index of the Shanghai Science and Technology Innovation Board closed down 0.6% and rose 1% this week. The China Securities Subdivision Non-ferrous Metals Industry Thematic Index closed up 1.1% and hit a new one-month high. It rose 5% this week, driven by the concept of rare earth permanent magnet stocks; Guangsheng Nonferrous has a daily limit.  The Ministry of Industry and Information Technology and the State Administration of Market Supervision issued on Monday the “Motor Energy Efficiency Improvement Plan (2021-2023)”, requiring the development of permanent magnet outer rotor electric drums, integrated screw compressors and other motors and load equipment, structural integration design technologies and  product.

7.Cement Prices Fell Across The Board

November is the traditional peak season for cement, but recently, national cement prices have dropped significantly.  Among them, some areas such as Hubei and Guangdong saw the biggest declines, which have fallen by about 100 yuan per ton from their highs at the end of October.  The main reason for the price decline is the downturn on the demand side.  Throughout the whole year of this year, the cement sector as a whole is not optimistic.  The Shenwan Cement Manufacturing Index has fallen by 17.39% this year. The leading Conch Cement has fallen by nearly 25% over the same period, and its market value has evaporated by 66.4 billion yuan.  Looking ahead to the trend of cement next year, Bank of China Securities believes that real estate financing is expected to rise, and it is optimistic about the cement supply and demand pattern in 2022.  Recently, the central government has repeatedly released signals of loose real estate financing, superimposed on the acceleration of the issuance of special bonds in the second half of the year, and the growth rate of social financing has bottomed out and the demand for real estate construction next year is expected to improve.

8.Insulin National Procurement Fell By 74%

On November 26, the sixth batch of national centralized drug procurement (special insulin procurement) was opened in Shanghai, and the results of the proposed selection were announced.  The centralized procurement of insulin involves six purchasing groups, and a total of 42 varieties of 11 companies are planned to be selected.  This is the first time that insulin has entered the national procurement, and it is also the first time that a biological drug has entered the national procurement.  The price cuts are generally higher than 40%.  Judging from the results of the proposed selection, the protamine and human insulin mixed injection (30R) with the lowest selected price of 17.89 yuan per tube has a price reduction of 64% relative to the highest effective declaration price, which is provided by Ganli Pharmaceutical.  The highest drop was Eli Lilly’s Protamine Zinc Recombinant Insulin Lispro Mixed Injection (25R). The proposed price is 18.89 yuan/piece, a drop of nearly 74%.

By【G translators – Financial Team】
Author: 雪梨

Disclaimer: This article only represents the author’s view. Gnews is not responsible for any legal risks.

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