China’s commodity index hit highest since pandemic despite sluggish housing market
COMMODITIES DATA
China’s commodity index hit highest since pandemic despite sluggish housing market
COMMODITIES DATA

China’s commodity index hit highest since pandemic despite sluggish housing market

 

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The Nanhua Commodity Index, a measures of domestic commodity prices reflecting the demand for industrial and infrastructure investment, hit 2,555.88 as of September 8, marking the highest level since the start of the Covid pandemic and surging 18% from the low point recorded on May 26.

The index, compiled by Nanhua Futures, tracks prices of multiple commodities including precious metals, energy, non-ferrous metals, ferrous metals and agricultural products, with crude oil, steel rebar and iron ore carrying the biggest weights of 14.5%, 9.3% and 8.8%, respectively.

The Nanhua Commodity Index had surged from the second half of 2020 to the first half of 2021 driven by a strong real estate market, with steel rebar prices surging from 3,103 yuan per tonne in April 2020 to a record high of 6,208 yuan per tonne in May 2021, before the prices sliding due to the government’s measures to cool down the overheating real estate market.

In early 2022, the commodity index surged again and hit a new high of 2,537.09 in June, 2022, driven by surging crude oil price amid by the Russia-Ukraine conflicts.

So far this year, China’s real estate market has remained sluggish, with new construction starts of real estate projects slumping, and meanwhile oil prices remained muted in the first half, before rebounding in July.

However, the Nanhua Commodity Index has surged since June this year.

Despite the muted real estate market, Chinese steelmakers’ profits have improved since the end of the second quarter of this year, and, the steel market experienced new situations including new demand from the shipbuilding and car-making industries as well as exports of steel products.

Since August, the pickup in infrastructure construction has boosted demand for bulk commodities. According to data from building material industry consultancy 100NJZ, cement demand from infrastructure has picked up since August, though cement demand from real estate construction hasn’t show improvement.