China’s August trade data
China released its August trade data on September 8, 2016. China’s exports in dollars fell 2.8% YoY (year-over-year) in August. However, the country’s imports rose 1.5% over this period. Previously, China’s July exports and imports had fallen 4.4% and 12.5%, respectively, on a YoY basis. China’s August trade data came in better than expected. Last month, China’s exports and imports both came in lower than what the markets were expecting.
Chinese imports have registered their first YoY increase after 22 months. It’s important to note that the slowdown in Chinese exports signals weakness in global demand. Falling imports signal weakness in China’s domestic demand.
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 (DBC).
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 U.S. Steel Corporation (X), have been crying foul for quite some time over growing exports from China. Although steel companies have managed to fend off Chinese imports by getting US authorities to impose anti-dumping duties, aluminum producers don’t have that privilege.
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 August trade data mean for steel, copper, and aluminum investors. Let’s start by looking at China’s aluminum exports.