Analysts at TD Securities explain that while money managers braced for a trade war between the world's largest economies, China's trade data pointed towards robust demand.
Key Quotes
“In fact, despite the trade-related angst and significantly weaker yuan, copper imports posted a strong 6% seasonally-adjusted rebound from last month's lackluster print, signaling strong underlying demand in the Middle Kingdom.”
“Further, Chinese smelters demonstrated their appetite as concentrate imports surged to an all-time high. Looking forward, metals could get a boost as Chinese stimulus should support economic activity.”
“Chinese exports of aluminium continue to churn higher during a time of year that usually sees exports ease. Indeed, exports surged some 4.6% on a seasonally-adjusted basis.”
“With the Chinese currency remaining weak, it is likely aluminium exports from China will remain elevated for the time being.”
“Chinese crude oil imports recovered in July, as teapot refiner demand picked back up after a round of maintenance and state-owned refineries remain strong. As trade tensions with the US heat up, China has targeted American crude oil and products for retaliatory tariffs.”
“With shipments from the US already being halted, and with the yuan continuing to weaken, Chinese crude futures have disconnected from global benchmarks in recent weeks, hitting record highs (over $80/bbl in USD terms).”
“Despite the trade spat, Chinese imports should remain strong as the Chinese stimulate and gaps are filled from other sources.”
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