Two Sessions Will Affect The Thinking of Metal Prices

The crown of some foreign media that the two sessions held for decades the most important meeting of 2013, the market for the General Assembly to tell the metal market and what impact a variety guess.

First, we briefly recall the history. Opening two sessions in 2012 when the price of copper is at a high level during the meeting only in the range of smaller shocks, but nearly a month later at the end of the meeting Powei down. Rebar prices are also soon in two sessions after started a more substantial decline. 2012 NPC and CPPCC Shanghai Futures Exchange copper prices fell 1.7% Total. During the two sessions held in 2011, the Shanghai Futures Exchange copper futures prices cumulative decline of more than 7%. Only from the results of these two statistical point of view, the two sessions did not seem to be able to the metal to promote the real meaning of good the final market performance was significantly weaker.

For this year's two sessions will be talking about economic policy, the focus of the market is mainly concentrated in the industrial development and monetary policy. Will during the meeting will discuss environmental policies, energy policies, as well as new economic development objectives and the expected level of inflation is generally expected.

Environmental policy and industrial policy in terms of energy, steel and non-ferrous metals industries are high-polluting industries in the traditional sense. Two sessions held in the fog and haze of a large area of ​​North China before the end of the case, one can imagine that will bring the future development of high-polluting enterprises variables. Capacity in general is also a low-cost production capacity due to high pollution, environmental pollution control of the metal industry is very likely to accelerate the rising cost of steel and non-ferrous metal production. But we need to pay attention to the message itself may produce some short-term impact on the market price, but the rise in the cost of production will eventually transfer to the market price will be a very long process.

Compared to the industrial policy, the most direct and guide the metal prices or economic growth targets and the expected level of inflation, as well as financial and monetary policy. The leading bodies of the two sessions will produce the new session of the national institutions, investors for the new policy also prone to more conjecture.

Current message, the vast majority of the predictions are that this year's economic growth target will be around 7.5%, unchanged from 2012. Despite the U.S. economic recovery is becoming more and more determined, the traditional China's largest export objects in Europe is still living in the quagmire, in the case of export is not effectively recover, even if it is to increase the scale of investment in fixed assets, to achieve 7.5% economic growth target is still not easy, so we believe that ultimately the economic growth target will not significantly deviate from this level. The fixed assets investment scale further expansion should undoubtedly meetings, but to expand the magnitude determine the scale of demand for the metal. As the financial pressure faced by the local government, the new government has not yet completed that seek the possibility of substantial expansion of investment in fixed assets is very small in the case of local government financing platform rectification. The final GDP growth target is recognized as about 7.5%, so obviously not achieve a decisive boost to all kinds of metal right now ubiquitous high inventory.

From a monetary policy point of view towards further clarified in the level of inflation, the central bank apparently will not easily change the current cautious attitude. Although the mainstream view is that the earlier Central Economic Work Conference signals given this year's economic development goals "steady partial loose" monetary policy, but in the years since, the central bank accumulated from the open market to return the funds nearly trillion yuan, funds face steadily tightening trend reversed sharply in the short term the possibility is very small, not enough to make the metal market currency environment is a fundamental change.

We believe that the metal market during the two sessions due to the probability of strong policy reasons, investors should not have too high expectations of the "two sessions Quotes. The government policy also is limited by a number of objective conditions, blindly expect massive investment-led economic growth, driven by the rise in commodity prices is likely to be disappointed.

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