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China’s December Trade Data: A Warning Sign for Metals

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China’s December trade data

Last week, China released its trade data for December. In dollar terms, the country’s exports rose 10.9% YoY (year-over-year), while imports rose 4.9%. The data deteriorated from November. Chinese exports rose 12.3% YoY, while its imports rose 17.7% in November. Overall, China’s December trade data were mixed for investors. Although China’s exports were better than expected, its imports missed analysts’ estimates by a wide margin. In 2H17, China’s imports were better-than-expected. However, its exports lagged Wall Street’s estimates.

China’s imports are seen as an indicator of Chinese demand, while its export data provide crucial insights into the global economy. It wouldn’t be prudent to draw conclusions based on one month’s data. However, lower imports signal soft demand from China.

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Series overview

Metal investors (XME) follow China’s trade data. China is the world’s largest steel and aluminum exporter (AA). Looking at copper (FCX), the country is the biggest copper importer due to a lack of copper assets. In this series, we’ll analyze what China’s December trade data implies for metal investors.

Talking of steel (X) (AKS), China exported 5.6 million metric tons of steel products last month Although exports have fallen on a yearly basis, it’s the second consecutive month that exports have risen on a monthly basis. If the uptrend in Chinese steel exports continues, it could put pressure on global steel prices.

Along with steel, China’s aluminum exports increased last month. We’ll discuss its exports in the next part.

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