2025-04-14
Unexpected monetary and credit policies have become a stabilizing factor for the steel market
Macroeconomic Data:
According to the statistics of the People's Bank of China, by the end of March 2025, the balance of broad money (M2) was 326.06 trillion yuan, a year-on-year increase of 7%; the balance of narrow money (M1) was 113.49 trillion yuan, a year-on-year increase of 1.6%. RMB loans increased by 9.78 trillion yuan in the first quarter; the cumulative increase in social financing scale in the first quarter was 15.18 trillion yuan, 2.37 trillion yuan more than the same period last year.
Lange Comments:
In March 2025, affected by international imported factors, seasonal energy demand, and the decline in the Price of some raw materials, the national PPI fell by 0.4% month-on-month and 2.5% year-on-year. The problem of oversupply is still prominent, and enterprises' confidence in resuming production is still insufficient; however, the signs of recovery in the Chinese economy are more obvious, and the comprehensive effectiveness of multiple policies to expand domestic demand is further manifested, thus maintaining a certain resilience in the demand for steel for manufacturing.
From the financial data from January to March 2025, both credit and social financing showed a rapid upward trend. The amount of new RMB loans increased year-on-year; the year-on-year increase in the social financing scale was significantly higher; narrow money (M1) has shown positive year-on-year growth for three consecutive months, with the growth rate rapidly recovering, while the year-on-year growth rate of broad money (M2) remained stable.
From the loan side, from January to March 2025, enterprise loans increased by 8.66 trillion yuan, including a 3.51 trillion yuan increase in short-term loans and a 5.58 trillion yuan increase in medium- and long-term loans, while bill financing decreased by 544.2 billion yuan, indicating that enterprises' willingness to invest in the short and medium-long term continues to increase, but their willingness to control short-term risks is stronger. From January to March 2025, resident loans increased by 1.04 trillion yuan, including a 160.3 billion yuan increase in short-term loans and an 883.2 billion yuan increase in medium- and long-term loans, indicating that as loan interest rates gradually decline, resident loan demand is also gradually recovering.
From the social financing side, from January to March 2025, the incremental social financing scale was 15.18 trillion yuan, 2.37 trillion yuan more than the same period last year. Among them, RMB loans issued to the real economy increased by 9.7 trillion yuan, an increase of 586.2 billion yuan year-on-year; net financing of corporate bonds was 525.1 billion yuan, a decrease of 472.9 billion yuan year-on-year; net financing of government bonds was 3.87 trillion yuan, an increase of 2.52 trillion yuan year-on-year, indicating that net financing of government bonds is still the "main force" of social financing, while corporate financing willingness is insufficient.
Since the beginning of this year, the domestic and international situations have been quite special, but China has calmly responded to various risks and challenges, and the economic operation in the first quarter continued its upward trend. At the same time, we must clearly see that external shocks have put some pressure on the stable operation of China's economy. However, China's economic development has always been moving forward by overcoming difficulties and challenges. We must implement more proactive and effective macroeconomic policies, make efforts to promote the rapid implementation and effectiveness of existing policies, and introduce new incremental policies in a timely manner as needed to effectively respond to the uncertainty of the external environment. We need to expand and strengthen the domestic cycle, take expanding domestic demand as a long-term strategy, increase efforts to stabilize employment and promote income growth, accelerate the release of service consumption potential while focusing on the replacement of old consumer goods with new ones, promote the integrated development of technological innovation and industrial innovation, and use high-quality supply to lead and create demand, promoting the steady and far-reaching development of the Chinese economy. At the same time, the central bank should maintain the stability of the domestic financial system. As the macroeconomic situation continues to improve, the resilience of China's financial system will further enhance. We should also prevent and resolve financial risks in key areas and external shocks in a timely and effective manner, steadily and orderly resolve financial risks in key areas, strengthen the financial stability guarantee system, deepen financial system reform, and effectively contribute to high-quality financial development and the construction of a strong financial nation.
At present, although the domestic steel market is still subject to the disturbance of external "tariff stick" factors, with efforts to promote the rapid implementation and effectiveness of existing policies, and new incremental policies will be introduced in a timely manner as needed to effectively respond to the uncertainty of the external environment. At the same time, the "unexpected" monetary credit data in the first quarter has also injected a "stabilizer" into the market. In the face of increasing external instability, China, as a major economy, must maintain its "stability." The domestic steel market will form a pattern of "external shocks and internal resilience, weak rebound" under the continuous promotion of various "stability" factors. (Lange Steel Research Center, Ge Xin, 15810671409 (WeChat same number) Please indicate the source when reprinting)
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