To prevent and defuse local debt risks, local governments have accelerated this year’s hidden debt swap program. According to Enterprise Early Warning data, as of March 30 this year, local governments had issued about 96 billion yuan of special refinancing bonds for swapping hidden debt, accounting for nearly half of this year’s planned issuance scale (200 billion yuan).

SMM Nickel News on June 16: Macro News: (1) The National Bureau of Statistics (NBS) announced today that in May, the total retail sales of consumer goods reached 4,132.6 billion yuan, up 6.4% YoY. Excluding automobiles, the retail sales of consumer goods amounted to 3,731.6 billion yuan, up 7.0% YoY. From January to May, the total retail sales of consumer goods were 20,317.1 billion yuan, up 5.0% YoY. Excluding automobiles, the retail sales of consumer goods were 18,432.4 billion yuan, up 5.6% YoY. (2) The latest financial data released by the central bank showed that the growth rate of broad money supply (M2) remained basically stable, and the growth rate of aggregate social financing remained at a relatively high level. At the end of May, the outstanding aggregate social financing was 426.16 trillion yuan, up 8.7% YoY, 0.3 percentage points higher than the same period last year. In May, the incremental aggregate social financing was 2.29 trillion yuan, a year-on-year increase of 224.7 billion yuan. M2 grew by 7.9% YoY, narrow money (M1) grew by 2.3% YoY, and the balance of RMB loans grew by 7.1% YoY, remaining at around 8% after adjusting for the impact of local debt replacement. Based on historical patterns, economic activities tend to be more active in June, leading to a corresponding increase in financing demand. It is expected that the growth of financial aggregates will remain stable in the next stage. Spot Market: Today, the SMM 1# refined nickel price was 119,400-122,050 yuan/mt, with an average price of 120,725 yuan/mt, down 775 yuan/mt from the previous trading day. The mainstream spot premiums quotation range for Jinchuan #1 refined nickel was 2,400-2,600 yuan/mt, with an average premium of 2,500 yuan/mt, unchanged from the previous trading day. The quotation range for spot premiums and discounts of electrodeposited nickel from mainstream domestic brands was 0-400 yuan/mt. Futures Market: The most-traded SHFE nickel contract (NI2507) opened lower and fluctuated upward during the night session last Friday, but the price continued to weaken during today's daytime session, dropping to a low of 119,000 yuan/mt. As of 11:30, SHFE nickel closed at 119,690 yuan/mt, down 340 yuan/mt or 0.28% from the previous trading day. In the short term, nickel prices are expected to fluctuate rangebound between 118,000-123,000 yuan/mt. If Indonesia tightens its nickel ore policies, it may trigger a phased rebound. However, in the medium and long term, the surplus pressure is difficult to resolve, coupled with a lack of incremental demand, limiting the upside room for nickel prices.

Today, the People's Bank of China (PBOC) released the financial data for May. As of month-end May 2025, the balance of broad money (M2) stood at 325.78 trillion yuan, up 7.9% YoY. The balance of narrow money (M1) was 108.91 trillion yuan, up 2.3% YoY. In the first five months, the net cash injection was 306.4 billion yuan. In terms of social financing, the outstanding social financing scale was 426.16 trillion yuan as of month-end May 2025, up 8.7% YoY. From January to May, the incremental social financing scale was 18.63 trillion yuan, with a YoY increase of 3.83 trillion yuan. In May alone, the incremental social financing scale was 2.29 trillion yuan, with a YoY increase of 224.7 billion yuan. "The rapid growth in social financing scale is mainly driven by direct financing such as government bonds and corporate bonds," an authoritative expert explained to a reporter from Cailian Press. Among them, there has been a significant change in corporate bond financing. "Since Q2, the overall cost of corporate bond issuance has shown a downward trend, remaining at a low level. In May, the average yield to maturity of 5-year AAA-rated corporate bonds was 1.97%, further declining from the already low level in April. Against the backdrop of low interest rates, enterprises have increased their bond financing efforts, which helps reduce overall financing costs." In addition, a bank account manager also reflected to a reporter from Cailian Press that bank customers are now generally more concerned about interest rate adjustments. In May, the PBOC lowered the policy interest rate, and the Loan Prime Rate (LPR), which serves as the benchmark for loan market pricing, also declined accordingly. Many enterprises found the interest rates more favorable, and their willingness to withdraw funds increased significantly. "Liquid Money" Growth Accelerates, Personal Mortgage Loan Disbursements Increase Among the financial data for May, there was also a notable change in the growth rate of M1. As of month-end May, M1 was up 2.3% YoY. In response, an authoritative expert frankly told a reporter from Cailian Press that currently, the M1 statistical scope includes currency in circulation (M0), current deposits of units and individuals, and customer reserves of non-bank payment institutions (such as WeChat Wallet and Alipay balances). Compared with time deposits in bank accounts, these are considered "liquid money" that is more convenient for payment transactions. In May, the growth rate of this "liquid money" accelerated significantly. In the view of the authoritative expert, the accelerated growth of "liquid money" reflects that the recent package of financial support measures has effectively boosted market confidence, with signs of recovery and improvement in economic activities such as investment and consumption. Another indicator that also proves the change in the heat of economic activities is personal loans. Data shows that a banker reflected to a reporter from Cailian Press that with the continued recovery of the local real estate market transactions, personal mortgage loan disbursements have increased. The Substitution Effect of Bonds on Loans Continues to Manifest Regarding the loan data that the market is concerned about, an authoritative expert told a reporter from Cailian Press that nearly 90% of the social financing scale consists of bonds and loans. Although there are differences in their applicable scenarios, to a certain extent, they can substitute and complement each other, jointly creating a favorable financial aggregate environment for stable economic growth. In fact, recently, the substitution effect of bonds for loans has also been quite evident. In response, experts have interpreted this as follows: On the one hand, the issuance of special refinancing bonds to repay bank loans has kept loan growth at around 8% after adjusting for the relevant impacts. "Special refinancing bonds issued for debt resolution exceeded 2 trillion yuan in Q4 last year, and over 1.6 trillion yuan have been issued since the beginning of this year. Preliminary estimates from market surveys suggest that the corresponding loans replaced amount to approximately 2.3 trillion yuan, with loan growth remaining at around 8% at the end of May after adjustment. The aforementioned experts frankly stated that in the short term, the debt replacement of financing platforms to repay bank loans may affect the total credit volume. However, in the long term, it helps mitigate local debt risks, freeing up more local fiscal resources to benefit people's livelihoods, promote development, and enhance the momentum of economic growth. On the other hand, government bonds substitute for bank loans. Some market experts told a Caixin reporter that there is a certain overlap in the investment directions of some government bonds and bank loans. For instance, in infrastructure projects, both special bonds and bank loans can serve as funding sources. In projects involving the acquisition of existing commercial housing for use as affordable housing, in addition to bank loans providing support, special bonds have recently been added to the policy toolkit and are currently being gradually implemented. Several banks in an eastern province told a Caixin reporter that since the beginning of this year, fiscal policies have become more proactive, with an increase in the issuance of local government bonds. Local governments and related enterprises are more inclined to use special bonds to meet the funding needs of project construction, which has a certain substitution effect on bank loans. Data shows that among the sources of fixed asset investment funds from January to April this year, national budgetary funds, including government bonds, grew by 16.7% YoY, significantly higher than the YoY growth rates of self-raised funds (3.9%), domestic loans (2.8%), and other funding sources (-4.2%). In addition, corporate bonds have also substituted for bank loans to some extent. Authoritative experts analyzed to a Caixin reporter that, in addition to interest rate impacts, some trending and institutional factors are also influencing enterprises' choices of financing methods. A series of supportive policies have been continuously introduced in recent years, facilitating smoother access for enterprises to issue bonds, particularly showing more positive changes in bond financing for private and technology innovation enterprises. In early May this year, the People's Bank of China and the China Securities Regulatory Commission issued multiple measures to support the issuance of technology innovation bonds. As these measures gradually take effect, enterprises will find it more convenient to issue technology innovation bonds for financing. "Therefore, against the backdrop of increasingly diversified financing channels and accelerated development of direct financing, the scale of social financing is a more comprehensive measure of financial support than loans alone."Authoritative experts have interpreted it as follows.

[Over 80% of Swap Bonds Issued, Real Estate Market Destocking Indirectly Aids Debt Resolution] By the end of May, the country had issued swap bonds exceeding 1.6 trillion yuan, completing over 80% of the 2 trillion yuan swap quota for existing hidden debt this year, thereby driving the continuous release of the effectiveness of the debt swap policy. Reporters noted that the debt risks of many local governments had been effectively mitigated. Against the backdrop of "destocking" in the real estate market, local debt resolution efforts this year also benefited from special bonds supporting land reserves. The issuance of swap bonds this year is nearing completion, but local debt resolution efforts remain arduous. Experts interviewed believe that in the second half of the year (H2), it is necessary not only to achieve organic coordination between debt resolution and economic growth, but also to continuously optimize debt resolution measures.

[Over 80% of Swap Bonds Issued, Real Estate Market Destocking Indirectly Aids Debt Resolution] As of the end of May, the country had issued swap bonds exceeding 1.6 trillion yuan, completing over 80% of the 2 trillion yuan swap quota for existing hidden debt this year, thereby driving the continuous release of the effectiveness of the debt swap policy. Reporters noted that the debt risks of many local governments had been effectively mitigated. Against the backdrop of "destocking" in the real estate market, local debt resolution efforts this year also benefited from special bonds supporting land reserves. The issuance of swap bonds this year is nearing completion, but local debt resolution efforts remain arduous. Experts interviewed believe that in the second half of the year (H2), it is necessary not only to achieve organic coordination between debt resolution and economic growth, but also to continuously optimize debt resolution measures.

April's financial data has been released. At the end of April, broad money (M2) increased by 8% YoY, while narrow money (M1) increased by 12% YoY. Due to the accelerated issuance of government bonds and the increased issuance of corporate bonds in April, the aggregate financing to the real economy (AFRE) increased by 1.22 trillion yuan YoY. Additionally, at the end of April, the outstanding balance of RMB loans stood at 265.7 trillion yuan, up 7.2% YoY. Industry experts stated that in April, the overall financial aggregate "showed an upward trend," while financing costs "declined." Overall, the support from finance to the real economy remained substantial, and the implementation effects of multiple rounds of monetary policies by the People's Bank of China were evident. It has become a consensus within the industry that policy thinking needs to shift towards placing greater emphasis on promoting consumption. Caixin reporters have learned that the current industry view is that the focus of financial policies should be on supporting the supply of high-grade consumption, and the cost of consumer loans on the demand side is no longer a determining factor. Industry insiders also suggest that promoting consumption requires top-level design, with industrial policies making plans, fiscal policies strengthening incentives and guidance, and financial policies providing supportive coordination. M2 needs to gradually digest the impact of the low base effect At the end of April, the balance of broad money (M2) was 325.17 trillion yuan, up 8% YoY, while the balance of narrow money (M1) was 13.14 trillion yuan, up 12% YoY. In the first four months, the net cash injection was 319.3 billion yuan. Why did the growth rate of M2 at the end of April increase significantly? Caixin reporters have learned that, on the one hand, the effect of "squeezing out water" in the financial sector last year was significant. Under the influence of the low base effect from the previous year, the growth rate of M2 at the end of April increased. On the other hand, the phenomenon of deposits "moving" to wealth management products last year did not reappear. "Since the beginning of this year, the bond market has experienced bidirectional fluctuations, without the overall upward trend seen last year. Deposits also did not experience the significant 'movement' seen last year. Statistically, this has manifested as a smaller year-on-year decrease, which has instead had a positive boosting effect on M2," explained industry insiders. Industry insiders also pointed out that in April this year, the overall growth momentum of money and credit remained steady and good. The low base from the same period last year would elevate the current data in the calculation of balance growth rates. As the low base effect diminishes, the future growth rate of M2 will return to the normal growth levels seen in the first few months of this year. Government bonds and corporate bonds boosted the growth of AFRE in April In April, the incremental AFRE was 1.16 trillion yuan, up 1.22 trillion yuan YoY. From January to April, the incremental AFRE was 16.34 trillion yuan, up 3.61 trillion yuan YoY. Industry experts analyzed that the accelerated issuance of government bonds was the main driving factor for the growth of AFRE. The increase in corporate bond issuance is also one of the reasons. Specifically, bond yields fell in April compared to the previous month. Enterprises seized the favorable conditions to increase bond financing, thereby driving down overall financing costs. Data shows that in April, the net financing of corporate bonds was approximately 190 billion yuan, up about 20 billion yuan YoY. "This year, fiscal support has been substantial, and the pace of bond issuance has been fast, supporting the expansion of domestic demand and credit easing, providing strong support for social financing. The macro policies have been effective since the beginning of the year, with increased fiscal policy intensity and an earlier pace being important factors. These, combined with monetary policy, have formed a stronger synergy, driving a good start to the economy," the aforementioned expert also pointed out. How did credit performance look after restoring 21,000 debt replacement loans? At the end of April, the outstanding balance of various RMB loans was 265.7 trillion yuan, up 7.2% YoY. From January to the end of April, various RMB loans increased by 10.06 trillion yuan, roughly in line with the same period last year. In terms of loan interest rates, the weighted average interest rate on newly issued corporate loans in April was approximately 3.2%, about 4 basis points lower than the previous month and about 50 basis points lower than the same period last year. The weighted average interest rate on newly issued personal housing loans was 3.1%, about 55 basis points lower than the same period last year. How did credit performance look after restoring the impact of local debt replacement? Industry experts stated that after restoring the impact of local debt replacement, the actual loan support was even higher than the statistical data. "Special refinancing bonds for debt resolution issued in Q4 last year exceeded 2 trillion yuan, and nearly 1.6 trillion yuan were issued from January to April this year. Preliminary market survey estimates suggest that the corresponding replacement loans amounted to approximately 2.1 trillion yuan. After restoration, the growth rate of RMB loans in April remained above 8%." May is traditionally a "slow month" for credit, coupled with the continued uncertainty in foreign trade. Industry insiders expect effective credit demand to remain affected. However, experts generally believe that the package of financial policy measures jointly launched by the People's Bank of China, the State Administration of Financial Regulation, and the China Securities Regulatory Commission in May has effectively boosted market confidence and played a positive role in restoring the effective demand of the real economy. Overall, the total amount of finance is expected to maintain steady growth in the coming period. Credit structure transformation, decline in real estate-related loans The evolution of the credit structure mirrors the changes in the economic structure. Market experts have stated that in recent years, the orientation of China's credit increment has significantly changed, driving the optimization of the credit stock structure. From the perspective of enterprises and residents, from the end of 2020 to the end of Q1 2025, the proportion of corporate loans increased from 63% to 68%, while the proportion of resident loans decreased correspondingly from 37% to 32%. Behind this rise and fall, it indicates that more credit funds have been channeled into real enterprises. The decline in residents' financing demand is also related to more rational behavior in home buying and investment. From the perspective of industry investment, from the end of 2020 to the end of Q1 2025, among all medium and long-term loans, the proportion of the manufacturing sector increased from 5.1% to 9.3%, while the proportion of consumer industries rose from 9.6% to 11.2%. In contrast, the proportion of the traditional real estate and construction sectors decreased from 15.9% to 13%. The cost of consumer loans is not a determining factor; promoting consumption requires top-level design. The aggregate amount of finance is "on the rise," while financing costs are "declining." Market observers noted that, based on the aggregate financial data from the first four months, the growth rates of total social financing, broad money (M2), and RMB loans continued to outpace nominal GDP growth, indicating that financial support for the real economy remains substantial. The implementation effects of multiple rounds of monetary policies by the central bank have been evident. Experts pointed out that future macroeconomic policies will place greater emphasis on promoting consumption, with financial policies focusing on supporting the supply of high-grade consumption. The cost of consumer loans on the demand side is no longer a determining factor. "Currently, promoting consumption requires top-level design and the formulation of medium and long-term development strategies, with simultaneous efforts on both the supply and demand sides. On the demand side, the key is to address issues such as employment, income, and social security to enhance residents' willingness and capacity to consume. Fiscal, employment, and social security policies can play a more direct role in this regard. On the supply side, the focus is on increasing the supply of high-quality consumer goods, which requires industrial policies to make sound plans, fiscal policies to strengthen incentives and guidance, and financial policies to provide supporting cooperation," the aforementioned experts further stated. Some industry insiders have observed that financial support for household consumption on the demand side has been substantial, resulting in a relatively high leverage ratio among households. Some banks have even engaged in excessive competition for consumer loans, with interest rates on consumer loans falling below their own break-even points. This model is unsustainable and may amplify the debt risks of some highly leveraged groups. Industry experts further emphasized that the fundamental goal of developing consumer finance is to expand effective consumer demand, broaden consumption scenarios, and ensure that consumer loans are genuinely used to support consumption. The principle of reasonable moderation should be adhered to, and banks need to maintain rational pricing by expanding services, tapping into customer bases, and growing the market, thereby promoting the sustainable development of consumer finance.

Today, the People's Bank of China released the financial data for March. At the end of March 2025, the balance of broad money (M2) was 3,260.6 trillion yuan, up 7.0% YoY, flat with the previous month. The balance of narrow money (M1) was 1,134.9 trillion yuan, up 1.6% YoY, 1.5 percentage points higher than the previous month-end. In terms of social financing, the outstanding social financing scale was 4,229.6 trillion yuan at the end of March 2025, up 8.4% YoY, 0.2 percentage points higher than the previous month-end. "While the financial system continues to increase monetary and credit supply, more positive changes have emerged on the demand side from enterprises and residents, jointly driving the rebound in loan growth in March," an authoritative expert told Cailian Press. Loans increased YoY, with personal housing loans growing rapidly against the backdrop of a "small spring" in the property market. Notably, at the end of March, the balance of RMB loans was 2,654.1 trillion yuan, up 7.4% YoY; RMB loans increased by 3.64 trillion yuan, 547 billion yuan more than the same period last year. Structurally, the balance of inclusive small and micro loans was 3.481 trillion yuan, up 12.2% YoY, and the balance of medium and long-term loans for the manufacturing sector was 1.48 trillion yuan, up 9.3% YoY. Loan rates remained at historically low levels. The weighted average interest rate for newly issued corporate loans (domestic and foreign currency) in March was about 3.30%, 45 basis points lower than the same period last year; the weighted average interest rate for newly issued personal housing loans (domestic and foreign currency) was about 3.10%, 60 basis points lower than the same period last year. Specifically, data showed that the production and operation prosperity of both the manufacturing and service sectors improved in March, with the manufacturing PMI reaching 50.5%, staying above the 50 mark for two consecutive months. Meanwhile, the implementation of major projects accelerated, with an increase in large projects worth over 10 billion yuan. "These positive factors are reflected in the credit market as a recovery in effective financing demand," a national bank told Cailian Press, noting that the construction progress of key projects in the western region has significantly accelerated, leading to a corresponding increase in loan demand. Since the beginning of the year, the cumulative loans issued to local key projects have increased by 67% YoY. In terms of personal loans, according to relevant market data, the activity of new and second-hand home transactions in many cities improved significantly in March, with the transaction area of second-hand homes in 30 key cities increasing by over 20% YoY. "The recovery in transactions has driven an increase in personal housing loan issuance," a branch of a state-owned bank in the eastern region told Cailian Press, noting that the bank's personal housing loan issuance in March roughly doubled compared to the same period last year, and the situation of early repayments has also eased significantly after the reduction in mortgage rates on existing home loans. In addition, the positive trend in consumer loans has also supported recent loan growth. Recently, various regions and departments have introduced many measures to vigorously boost consumption, and consumers are more willing to increase high-grade consumption. It is understood that banks have increased the supply of consumer loans while ensuring commercial sustainability, and have better met residents' consumer credit needs by enriching financial products and providing convenient services. However, some industry experts told Cailian Press that in recent years, China's financial support for effective consumer demand has been continuously increasing, and banks should maintain a reasonable and orderly competitive order, guard against low-price competition that cannot cover operating costs, and maintain rational pricing by sinking services, exploring customers, and expanding the market to promote the sustainable development of consumer finance. It is also important to note that the development of consumer finance fundamentally aims to expand effective consumer demand, expand consumption scenarios, and ensure that consumer loans are truly used to support consumption, achieving the policy intent of financial support for consumption. The acceleration of government bond issuance remains a support for social financing growth, and the capital replenishment of large banks is expected to leverage 4 trillion yuan in credit increments. In March alone, the increment of social financing scale was 5.89 trillion yuan, 1.06 trillion yuan more than the same period last year. Overall, the cumulative increment of social financing scale in Q1 2025 was 15.18 trillion yuan, 2.37 trillion yuan more than the same period last year. "The bulk of social financing scale is usually loans and government bonds. In March this year, in addition to loans, government bonds grew rapidly, also driving the continued increase in the growth rate of social financing scale," an authoritative expert told Cailian Press. Relevant data showed that new government bonds in March were nearly 1.5 trillion yuan, nearly 1 trillion yuan more than the same period last year. In particular, the issuance of special refinancing bonds for replacing hidden debt maintained a fast pace. In the short term, the replacement of financing platform debt to repay bank loans may affect the total credit, but in the long term, it is conducive to mitigating local debt risks, promoting the market-oriented transformation of financing platforms, and freeing up more local financial resources to enhance economic development momentum. Recently, the Ministry of Finance also announced the issuance of the first 500 billion yuan in special treasury bonds to support the replenishment of core tier 1 capital for large state-owned banks. An authoritative expert told Cailian Press that replenishing capital for large state-owned banks can increase the banks' safety cushion, better meet international regulatory requirements, and further enhance their ability to serve the real economy, with an expected leverage of 4 trillion yuan in credit increments in the future. For the next stage, the authoritative expert admitted that financial aggregate growth still has support. April is traditionally a "small month" for credit, and with the intensification of external shocks, industry insiders expect that the effective credit demand of some enterprises may pull back. However, the authoritative expert told Cailian Press that China's economy has strong resilience, and all aspects will continue to maintain strong policy support to help strengthen the domestic circulation. The financial sector is also taking multiple measures to stabilize financial support, support the exploration of domestic effective demand, and promote the reasonable growth of financial aggregates.

According to preliminary calculations, the annual GDP was 13,490.84 billion yuan, up 5.0% YoY at constant prices. By industry, the added value of the primary industry was 914.14 billion yuan, up 3.5% YoY; the secondary industry was 4,920.87 billion yuan, up 5.3% YoY; and the tertiary industry was 7,655.83 billion yuan, up 5.0% YoY. By quarter, GDP grew 5.3% YoY in Q1, 4.7% YoY in Q2, 4.6% YoY in Q3, and 5.4% YoY in Q4. On a QoQ basis, GDP grew 1.6% in Q4.

[SMM Lead Morning Meeting Summary: Visible Inventory Accumulation Near Delivery May Weigh on Lead Prices] PBOC Governor Gongsheng Pan: Resolutely Prevent Exchange Rate Overshooting Risks, Strengthen Counter-Cyclical Adjustments, and Local Debt Risks Tend to Converge. This week, the SHFE lead 2501 contract is expected to enter delivery, with delivery brand transfers to delivery warehouses bringing a certain inventory increase. Compared to last month's transfers, this month's lead ingot delivery volume has significantly decreased compared to December...

[SMM Lead Morning Meeting Summary: Visible Inventory Accumulation Near Delivery May Weigh on Lead Prices] PBOC Governor Gongsheng Pan: Firmly Prevent Exchange Rate Overshooting Risks, Strengthen Counter-Cyclical Adjustments, and Local Debt Risks Are Tending to Converge. This week, the SHFE lead 2501 contract is expected to enter delivery, with delivery brand transfers to delivery warehouses bringing a certain inventory increase. Compared to last month's transfers, this month's lead ingot delivery volume has significantly decreased compared to December...