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What China’s March Trade Data Could Mean for Metal Investors

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Apr. 15 2019, Published 1:36 p.m. ET

Metal investors

China’s trade data is especially crucial for metal and mining investors (XME) given the country’s dominant share in global metal consumption. While China is the biggest steel and aluminum exporter, it’s the biggest copper importer. The country’s metal exports and imports are among the key drivers for metal prices. Miners like Freeport-McMoRan (FCX), BHP Billiton (BHP), and Vale (VALE) closely follow China’s metal trade data to get insights into the country’s economic activity.

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Steel

Last month, China exported 6.33 million metric tons of steel, a year-over-year rise of 12.0%. Exports also rose on a month-over-month basis. In the first quarter, China’s steel exports rose 11.0% as compared to the corresponding period last year. We saw a decline in China’s steel exports between 2016 and 2018. However, this year, steel exports have been on an uptrend. US steel companies like U.S. Steel (X) and AK Steel (AKS) see higher Chinese steel exports as a major challenge.

Aluminum

In aluminum, China’s export juggernaut was back on track in March after the fall in February. The country exported 546,000 metric tons of unwrought aluminum in March, which represents a year-over-year rise of almost 21%. Despite President Trump’s Section 232 tariffs, Chinese aluminum exports have been on an uptrend and reached an all-time high last year. Given the current trend, 2019 could turn out to be another record year for China’s aluminum exports. Alcoa (AA) has called upon the Trump administration to address the core issue of Chinese overcapacity instead of imposing a blanket tariff on US aluminum imports.

Copper

In copper, China’s March trade data offered mixed signals. The country’s copper ore imports rose 10.6% YoY in March. However, unwrought copper imports fell by 11.1%. Unwrought copper imports rebounded month-over-month, while copper ore imports fell ~8%.

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