“Weakness in the Chinese trade data has commodities on edge, as concerns of a major slowdown in the world’s largest commodity consumer continue to grow,” note TD Securities analysts.
“While the extent of the weakness in the numbers could be highlighting front-running ahead of tariffs, the fact remains that both unwrought copper and concentrate imports were materially lower. This reduction in physical demand continues to weigh on the red metal, as prices trend materially below recent highs. But, we anticipate Chinese authorities will announce new stimulus measures, which suggests we may have already seen the lows a few weeks ago.”
“The environmental aluminum smelter shutdowns were put on hold, but exports were still marginally lower in December as US tariffs directed at Chinese producers took hold. Nonetheless, export levels are still extremely elevated, which is highlighted by building LME and SHFE inventories.”
“Chinese crude imports reached another all-time high in December, while natural gas imports also made new highs, to the detriment of coal imports. With prices nearly 30% off their highs, Chinese refineries will likely keep run rates near their highs, which should keep the Middle Kingdom’s crude appetite robust into 2019. As such, recent concerns that demand is ebbing are likely overblown.”