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China’s April Trade Data: What It Means for Metal Investors

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Dec. 4 2020, Updated 10:43 a.m. ET

China’s April trade data

China released its April trade data on May 8. The data weren’t received well by investors. Asian markets were trading lower in early trade. China’s exports in dollar terms fell 1.8% YoY (year-over-year) in April. Imports fell 10.9%.

Notably, China’s April exports and imports both came in lower compared to what markets (SPY) were expecting. This comes after a splendid performance in March when China’s trade data exceeded the Market expectations by a wide margin. China’s March exports rose 11.5% YoY. Its imports fell 7.6%.

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Implications for metal investors

China’s trade data are especially crucial for metal investors. China is the dominant player in industrial metals from steel to copper. The impact of China’s slowdown is visible in all of the commodities (DBB). The above graph shows the movement of steel, copper, and aluminum prices. As you can see, all of the metal fell to multiyear lows in January. However, as China’s economic data started to improve, metals climbed higher.

Series overview

China impacts metals in different ways. In steel and aluminum, rising Chinese exports distort the global markets. US producers including AK Steel (AKS), Alcoa (AA), and Nucor (NUE) have been crying foul over growing exports from China for quite some time. In copper, China’s imports impact the market. The demand slowdown in China is negative for US-based copper miners such as Freeport-McMoRan (FCX).

In this series, we’ll analyze what China’s April trade data mean for steel, copper, and aluminum investors. Let’s start by looking at China’s April aluminum exports.

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