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A Deep Dive into China’s Slowdown

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Oct. 16 2017, Updated 12:21 p.m. ET

China’s slowdown

On October 13, 2017, China released its trade data for September. In dollar terms, the country’s exports rose 8.1% year-over-year (or YoY), and its imports rose 18.7%.

China’s September trade data showed improvement compared to the previous month’s data. In August, China’s exports rose 5.5% YoY, and its imports rose 13.3%.

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September trade data

However, China’s September trade data was a mixed bag for investors. While its growth in exports was lower than expected, imports data shattered analysts’ estimates. Analysts surveyed by Reuters expected China’s imports to rise 13.5% YoY in September.

Notably, this is the second consecutive month when China’s imports have beaten expectations, and exports have been lower than expected. Higher imports suggest strong domestic demand in China.

Over the last couple of years, some market corrections have been pinned on China. Whether it was the steep fall in global equities after China devalued its currency in August 2015 or poor economic data in January 2016, Chinese economic data has been a key driver of global markets.

Series overview

Although Chinese economic data affects global markets, metals tend to be even more sensitive to Chinese data. China impacts metals in different ways. In steel and aluminum (AA), Chinese exports impact global markets.

US steel producers such as AK Steel (AKS) and U.S. Steel (X) have long pointed to allegedly subsidized Chinese steel exports for the global steel industry’s troubles. However, copper is a different story, and we also need to look at China’s copper imports (FCX).

In this series, we’ll see what China’s September trade data implies for metal investors (SPY) (SPX-INDEX). Let’s begin by looking at China’s steel exports.

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