Will the surge in commodity cargo volumes in July imply a new economic cycle?

time2017/11/17

Will the surge in commodity cargo volumes in July imply a new economic cycle?

On one side is the rise in the price of steel and coal, on the other side of the railway road.

This summer, coal, steel and other commodities were in hot demand, driving the growth of the entire rail freight.

According to the data, the national railway in July was loading 5.76 million vehicles on a daily basis, up 23.7 percent year on year. The average daily load of steel was 7804, up 15.6% year on year. The average daily load of metal ore was 16,000 vehicles, up 7.1 percent year on year.

In July, the total number of railway cargo deliveries in China was 246m tonnes, up 17 per cent year-on-year.

But does hot commodity demand mean the economy is entering a new cycle?

Zhang yongjun, deputy chief economist at the China center for international economic exchanges, told reporters that steel production was negative in the first few years, and that the pace of steel production is likely to be much more restorative. "There are some economic Numbers that are higher, but whether the economy is going to be sustainable or not, and look at it."

According to the national bureau of statistics, crude steel production in the january-july period was 490 million tons, up 5.1 percent year-on-year. The total output of crude steel in July was 74.02 million tons, up 10.3% year on year, and the annual output was 890 million tons, the highest level in history. At the same time, steel prices recently hit a five-year high, reflecting strong demand for steel.

But considering the DeTiaoGang not included in the statistics of previous data statistics, and national DeTiaoGang capacity has been dropped at the end of June this year, whether the actual steel production and demand for the record, is still uncertain.

Commodities are busy

On August 5, the 86614 "point-to-point" steel columns of the group 56 were sent from shuangyashan station to the port of the fish circle. That makes the amur steel, which can be sold to the south steel market as quickly as possible. This is another "point-to-point" railway launched by Harbin railway, which reflects the great demand of steel.

In addition, the 21st century economic reporter learned that, outside some of the coal mines, the phenomenon of trucks and other coal transport, reflected the strong demand for coal.

Railway head office also released a message that, under the strong pull of coal and coal transport, the total number of bulk cargo loading continues to recover.

China imported 625 million tons of iron ore and concentrate from January to July, up 7.5% year on year, according to customs data. In the same period, imports of coal and lignite totaled 153 million tons, up 18.2 percent year on year. In addition, the imports of the two categories of products in January and July were 315.4 billion yuan and 88.9 billion yuan respectively, up by 58.3 percent and 117.7 percent year-on-year respectively.

The rise in commodity imports has also contributed to the warming of shipping. According to the data, 7.33 billion tons of goods were shipped in the first seven months of 2017, up 7.9 percent year on year. Coastal ports have swallowed 5.05 billion tons, up 7.5% from a year earlier.

In July, the cargo throughput of the country was 1.07 billion tons, up 10.3% year on year. The throughput of China's ports and foreign trade was 340 million tons, up 7.3 percent year on year. The container throughput of China's ports was 20279,000, up 10.2% year on year.

The overall pick-up in freight data has indeed benefited from a rise in demand for commodities.

Liu haimin, an expert with the national federation of industry and commerce, told reporters that steel exports are falling and domestic steel production is picking up. "With steel prices rising, it can be judged that the strength of steel demand is real."

According to the data, China's export of steel was 6.96 million tons in July, down 32.4 percent year-on-year. China's total exports of steel totaled 47.95 million tons, down 28.7 percent year on year.

But he noted that steel companies are now ramping up production, as well as limiting production in northern areas this winter. "There is not much production now, and the future is hard to catch up. Steel production was negative a few years ago, and now demand is increasing and the future is expected to be good, so the price of steel is high and production is fast.

The new economic cycle?

The 21st century economic reporter understands that the massive increase in commodity traffic is not an isolated phenomenon.

According to data from the railway corporation, the national railway container transportation, high-speed railway transportation and cold chain logistics continued to grow rapidly in July. Among them, the year-on-year growth rate of container and goods vehicles increased by 40.8% and 66.7% respectively, while cold chain logistics increased 120.1 percent year-on-year. Due to the close relationship between the container and foreign trade, it shows that the foreign trade is stronger.

"This year's foreign trade figures have indeed been improving, at least from the past few years, which has been a positive change, but also an objective analysis. Because the base of comparison with the past is still low, it should be a restorative growth. Wang yusheng, professor of economics at Peking University, thinks.

"At the same time, it is not possible to say that global foreign trade has entered a period of rapid growth, but only recovered." He said.

In addition, retail sales of consumer goods totaled 20.78 billion yuan in january-july 2017, up 10.4 percent year on year. It also shows a rise in domestic demand.

"Both internal and external demand has improved this year, and on the one hand, a rebound in prices has boosted corporate profits and accelerated production, which is an important reason for the recovery of the economic growth this year. On the other hand, the external demand has recovered significantly, and the growth rate of imports and exports has been relatively fast this year, which has led to the logistics industry. Liu xuzhi, senior analyst at bocom financial research center.

Indeed, the global economy is showing signs of warming. For example, the latest forecast from the international monetary fund on July 23rd is that the world economy will grow 3.5 percent in 2017, 0.3 percentage points higher than in 2016, the highest in three years.

So is China's economy entering a new cycle?

China's economy grew at 6.9 per cent in the first quarter of 2017 and the first half of the year, up from 6.8 per cent in the fourth quarter.

But Mr. Liu also pointed out that steel and coal is not likely to keep growing at a rapid pace, and that economic growth is likely to slow.

"Growth is expected to slow slightly in the third quarter, as some macro indicators fell in July." "In fact, it is very difficult for the Chinese economy to enter a new period of full acceleration," he said.

Liu pointed out that the main reason for the current economic recovery is the recovery of prices and the recovery of external demand, but these two factors are not sustainable. "The real estate and financial sectors that underpin China's growth have peaked. I think that the establishment of the new period, there must be a new economic growth momentum, while the high-end equipment manufacturing industry and high-tech industry and service industry growth momentum is good, but at present the main economic growth is still the traditional second industry."

In addition, Mr Wang thinks that China's economic growth will be accelerated in the future, and it will take several more years to jump to conclusions. "The economic trend in the second half of the year is indeed good, but it is still normal to maintain 6.9 per cent or just below this level in the first half of the year."

He also pointed out that the current foreign trade is improving, but the domestic economy still needs to accelerate the transformation. "It is possible to wait until the transition to economic restructuring has made significant progress, and China can only roughly reach the bottom of l-shaped growth. The impetus for new economic growth provides better support for economic growth. Instead of the total stimulus and monetary stimulus of the past.