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Crude Tanker Stocks and ETFs: The Current Outlook

PART:
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Part 6
Crude Tanker Stocks and ETFs: The Current Outlook PART 6 OF 8

China’s Manufacturing and Auto Industries’ Recent Performance

China’s PMI: August 2017

Markit’s manufacturing PMI (purchasing managers’ index) is an indicator of a country’s economic health. The index was 51.7 for China (MCHI)(FXI) in August 2017, compared to 51.4 in July 2017. For the last 13 consecutive months, China’s PMI has been above 50. This level is considered neutral. China’s manufacturing sector showed signs of strength in August.

China&#8217;s Manufacturing and Auto Industries&#8217; Recent Performance

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China’s automobile sales: August 

One of the major petroleum products consumed in China is gasoline, which is impacted by the transportation industry. According to data from CAAM (China Association of Automobile Manufacturers), in August, 2.19 million automobiles were sold. That was a YoY (year-over-year) rise of 4.1%, higher than the 5.3% million sales in July.

In 2017, China increased its sales tax on small-engine vehicles. This move slowed China’s auto sales down. CAAM (China Association of Automobile Manufacturers) expects auto sales growth in 2017 to be ~5%. In 2016, the growth rate was 15%.

The importance of the manufacturing and auto industries

The transportation industry drives oil demand. More vehicles mean more oil consumption. Manufacturing activities also drive oil demand. As the manufacturing industry expands, the demand for oil increases and vice versa, which makes it important to look at China’s PMI and auto sales to gauge the future of the crude tanker industry and companies such as Gener8 Maritime Partners (GNRT), Frontline (FRO), DHT Holdings (DHT), Euronav (EURN), and Nordic American Tankers (NAT).

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