Will monetary support shift to promote the new balance of steel?

According to statistics from the People's Bank of China, at the end of October 2021, the balance of broad money (M2) was 233.62 trillion yuan, up 8.7% year on year, 0.4 percentage points higher than the end of last month and 1.8 percentage points lower than the same period of last year.The balance of narrow money (M1) was 62.61 trillion yuan, up 2.8 percent year on year, 0.9 percentage points lower than the end of last month and 6.3 percentage points lower than the same period last year.Yuan loans increased 826.2 billion yuan in October, 136.4 billion yuan more than a year earlier.Social financing increased by 1.59 trillion yuan in October, 197 billion yuan more than the same period last year.

Under the influence of international import factors and the tight supply of major energy and raw materials in China, the INCREASE in PRODUCER price index (PPI) in October expanded to a slightly higher level. The PPI continued to hit a yearly high in October, with prices of coal and crude oil mainly contributing to the increase. However, as the policy to ensure supply and stabilize prices continued to increase, the high prices of coal and other commodities fell rapidly.The subsequent INCREASE in PPI will also shrink rapidly, but at the same time, the pressure from high PPI to CPI will gradually increase. For the whole manufacturing industry, the pressure of sharply rising cost will likely continue for a period of time, especially for small and medium-sized manufacturing enterprises.

According to the major financial data in October, the growth rate of credit and social finance began to stabilize. The amount of new RMB loans in October decreased significantly from the previous month and increased year-on-year.The increment of social financing decreased significantly from the previous month and also increased year-on-year.The year-on-year growth of narrow money (M1) continued to decline, while the year-on-year growth of broad money (M2) picked up slightly, indicating that the central bank maintained a reasonable and moderate strategy for the prudent monetary policy.

From the current monetary policy setting of the People's Bank of China, the prudent monetary policy has maintained continuity, stability and sustainability. Although the pace of local bond issuance has accelerated in October, the funding support for key projects has been enhanced, which is not as good as market expectations, but it plays a more obvious role in supporting the infrastructure industry.Rare alone in October, the central bank announced the personal housing loan balance data, this shows that the central bank to maintain the healthy development of the real estate market policy was in the ground, at the same time, the recent real estate lending financial institutions are also significantly faster, which will be conducive to alleviate the pressure of capital of the real estate industry, at the same time, promote the construction of real estate project progress and advance of new projects.At the same time, the official launch of the people's bank of carbon reduction support tools, key support for clean energy, energy conservation, environmental protection and carbon emission reduction technology three areas, that change in direction of monetary policy support, it is reflects the central bank in the guide financial institutions to increase manufacturing industry under the environment of the "double carbon" medium to long term loan demand, thus forming the structural transformation of monetary policy.

In general, the acceleration of local bond issuance and real estate financing will accelerate the start and construction progress of projects, thus enhancing the release of demand for construction steel.For the manufacturing industry, enterprise financing demand is not strong, support tools to reduce emissions of launch will guide enterprises to increase financing, thereby increasing demand of energy saving transformation equipment, thus increasing manufacturing steel demand, but also should see, the domestic steel market demand has entered the traditional off-season, the effect of money in place may be affected by seasonal factors,As a result, the actual market purchasing demand may lag behind, thus promoting the domestic steel market to seek a new balance in the demand structure.