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China’s January Trade Data: Implications for Metal Investors

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China’s January trade data

On February 8, 2018, China released its trade data for January. In dollar terms, China’s exports rose 11.1% YoY (year-over-year), while imports rose 36.9%. The data, especially on imports, showed an improvement from December. China’s exports rose 10.9% YoY, while imports rose 4.9% YoY in December. China’s January trade data were better than expected for exports and imports.

Commodity investors closely follow China’s trade data due to the country’s dominant share in global commodity markets (XME). China is the world’s largest steel and aluminum exporter. Looking at copper (FCX), China is the biggest copper importer (GLEN-L). In this series, we’ll analyze what China’s January trade data mean for metal investors. Specifically, we’ll be looking at copper, aluminum (AA), and steel investors’ perspective.

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Steel exports

In January, China exported 4.65 million metric tons of steel products—a yearly decline of 37.3%. January is the 18th consecutive month that China’s steel exports have fallen on a yearly basis. In absolute terms, China’s January steel exports are at the lowest level since February 2013. Although China’s January and February economic data should be read with caution due to the Lunar New Year holidays, the data show a continued decline in Chinese steel exports. US steel mills, including U.S. Steel Corporation (X), see higher Chinese steel exports as the steel industry’s key challenge.

While China’s steel exports fell last month, there was little respite for aluminum.

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