Trade balance fell in February
According to data released by the National Bureau of Statistics of China on March 7, China’s imports and exports fell in February. This made the trade balance fall from $63.29 billion in January to $32.6 billion in February.
Chinese exports fell 25.4%
Chinese exports, denominated in US dollars, fell 25.4% in February 2016—compared to the export figures a year ago. This is worse than the expected fall of 12.5%. It’s steeper than January’s fall of 11.2%. The record decline in Chinese exports in February is the steepest year-over-year export decline since 2009. It recorded a fall of 26.4% in 2009. According to HSBC economists, the decline in export figures could be due to the extreme decline in the external demand.
Chinese imports fell 13.8%
In February, China’s import data fell by 13.8%—compared to the import figures in February 2015. This is worse than the Market’s expectations of a 10% fall. China’s copper imports were 420,000 tons in February. This is 4.5% lower than the imports of 440,000 tons in January. However, it’s a rise of 50% from the value of 280,000 tons in February 2015. China’s total copper imports in the first two months of 2016 were 860,000 tons—a rise of 23.3% from a year earlier.
The higher trade data worsened the sentiment around China—the second-largest economy. China’s economic growth in 2015 fell to a 25-year low of 6.9%. This also dragged copper prices to multiyear lows. Chinese officials forecast growth of 6.5%–7% in 2016. The data could impact major base metal miners Freeport-McMoRan (FCX), Glencore (GLNCY), Alcoa (AA), and BHP Billiton (BHP). It could also impact the Power-Shares DB Base Metals Fund (DBB). In the next part, we’ll explain why Goldman Sachs thinks that copper and aluminum will fall 20% in the next 12 months.