SINGAPORE, July 10: London copper fell on Wednesday after top metal user China reported surprisingly weak trade data for June and flagged a grim outlook for exports in the third quarter, raising questions about demand.
China’s exports fell 3.1 percent in June from a year earlier, the first decline since January 2012, while imports dropped 0.7 percent, leaving the country with a trade surplus of $27.1 billion for the month, the Customs Administration said on Wednesday.
The customs office also said a government crackdown on speculative activity may have laid bare China’s real trade picture and that the country faces serious challenges ahead.
‘We don’t expect any acceleration in economic activity in China. Over the next six months a dip as far as $6,000 for copper cannot be ruled out,’ said analyst Dominic Schnider at UBS in Singapore.
Three-month copper on the London Metal Exchange fell to as low as $6,688 a tonne, within reach of a three-year low level of $6,602 hit on June 25, before paring losses to trade at $6,692.75 a tonne by 0249 GMT, down 0.55 percent.
Copper prices fell 1.5 percent in the previous session and are down more than 15 percent for the year.
The most-traded November copper contract on the Shanghai Futures Exchange fell 1.78 percent to 48,130 yuan ($7,900) a tonne.
The trade data compounded a dimming demand outlook for copper, after the International Monetary Fund trimmed its global growth forecast on Tuesday for the fifth time since early last year due to a slowdown in emerging economies and troubles of recession-struck Europe.
The market will now be looking at China’s second-quarter gross domestic product reading due next week. China’s resolve to revamp its economy for the long-term good will be tested this month when a slew of data show growth is grinding towards a 23-year low, with no recovery in sight.
China’s imports of copper rose 5.9 percent to 379,951 tonnes in June from 358,672 tonnes in the previous month, data from the General Administration of Customs showed.
Imports were driven by China financiers, looking to import cheaper international material to the domestic market, said Natalie Rampono, an analyst with ANZ in Melbourne.
‘Year on year it’s up about 10 percent…It’s encouraging. We still have a very cautious view on China, if you look at the headline number, export figures are really low and worse than expected so that could weigh on prices near term,’ she added.
(agencies)
Hong Kong, China shares pare gains after dismal China trade data
HONG KONG, July 10: Hong Kong and China shares pared gains on Wednesday after Chinese data showed exports fell for the first time in 17 months in June, stoking fears that second quarter growth will disappoint.
Commodities and export-related counters underperformed as investors braced for monthly money supply and loan growth, due by July 15. Second quarter GDP is due on Monday, as are monthly urban investment, industrial output and retail sales figures.
While June data met expectations for a $27.1 billion trade surplus, imports dipped 0.7 percent, versus an expected 8 percent growth, while exports dropped 3.1 percent, far below a projection for 4 percent growth.
At 0335 GMT, the Hang Seng Index was up 0.4 percent at 20,730.8, as early gains of almost 2 percent were pared. The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.5 percent.
The CSI300 of the leading Shanghai and Shenzhen A-share listings inched up 0.3 percent, while the Shanghai Composite Index was up 0.4 percent. They have each tumbled nearly 20 percent from end-May highs.
‘The trade data is a negative, no question about that. But it’s also no real shocker,’ said Larry Jiang, chief strategist at Guotai Junan International Securities. ‘It’s not that the Chinese economy lacks money, it’s about efficient allocation and the money supply data will hopefully offer some clues.’
‘At this point, it is very difficult to persuade people to return to the market. Investors will be prepared to pay a premium for shares of companies that demonstrate earnings that are more immune to the cyclical winds in China,’ Jiang added.
Shares of China Rongsheng, the country’s largest private shipbuilder, tumbled almost 5 percent to another record low. Port terminal operator Cosco Pacific fell 3 percent in Hong Kong.
Coal counters reversed early gains in Hong Kong, with China Shenhua Energy and China Coal each down 0.8 percent. Jiangxi Copper dived nearly 5 percent in Hong Kong.
Shares of Chow Tai Fook jumped 9 percent after the jewellery retailer posted a 63 percent rise in first-quarter revenue from a year earlier, mainly due to a surge in gold products sales following a sharp fall in gold prices.
The Hong Kong property and Macau gambling sectors were also mostly stronger as investors rotated out of China beta sectors, with Asia insurance giant AIA Group again strong, up more than 1 percent. New World Development was up 2 percent, while Sands CHina climbed 3.4 percent. (agencies)
China warns of ‘grim’ trade outlook after exports surprise
BEIJING, July 10: China warned on Wednesday of a ‘grim’ outlook for trade as the world’s second-largest economy surprised financial markets by reporting a fall in exports and imports when both had been expected to rise.
The figures, which follow a government crackdown on the use of fake invoicing that had exaggerated exports earlier this year, are likely to raise fresh concerns about the extent of the slowdown in the economy and global demand.
The June data, showing that exports fell 3.1 percent from a year earlier and imports dropped 0.7 percent, may now reflect the true trade picture, customs officials said.
‘China faces relatively stern challenges in trade currently,’ customs spokesman Zheng Yuesheng told a news briefing on the June trade figures.
‘Exports in the third quarter look grim,’ said Zheng.
The customs agency said exporters were losing confidence in the face of weak overseas demand, rising labour costs and a strong yuan currency.
The Australian dollar fell about a third of a cent after the China data, reflecting worries about Chinese demand for Australia’s commodities, such as iron ore and coal.
The MSCI Asia-Pacific ex-Japan index was up 0.5 percent after gaining as much as 1.2 percent to a one-week high before the trade figures came out.
The exports fall was the first since January 2012. Economists had expected exports to increase 4.0 percent and imports to rise 8.0 percent.
China’s trade data is volatile and has been distorted by speculative capital flows across the country’s border. Doubts about the accuracy of the figures had abated slightly since the customs office and top foreign exchange regulator launched a campaign in May to crack down on fake export invoices.
Fake invoicing inflated China’s official import and export totals by $75 billion in the first four months of 2013, local media reported on June 14, citing an internal review by China’s commerce ministry.
The customs data showed that exports to the United States, China’s country’s biggest export market, fell 5.4 percent, while exports to the European Union dropped 8.3 percent.
‘The surprisingly weak June exports show China’s economy is facing increasing downward pressure on lacklustre external demand,’ said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai.
‘Exports are facing challenges in the second half of this year. The appreciation of the U.S. Dollar and the Chinese government’s recent crackdown on speculative trade activities also put pressure on exports.’
China had a trade surplus of $27.1 billion in June, the customs administration said, largely in line with the $27.0 billion expected by economists.
China’s reform-minded new leaders have shown a tolerance of slower growth, although they still need to avoid widespread job losses that could threaten social stability.
Economists expect data next week to show that annual growth in China for the April-June quarter slowed down to 7.5 percent.
A continued slide in growth could test leaders’ resolve to tolerate a short-term slowdown in the economy while pressing ahead with efforts to revamp the economy for the longer term. (agencies)
Zinc futures down 0.36% on low spot demand, global cues
NEW DELHI, July 10: Amid low domestic demand and weak global trend, zinc prices fell by 0.36 per cent to Rs 112.05 per kg in futures trade today as speculators reduced their positions.
At the Multi Commodity Exchange, zinc for delivery in August declined by 40 paise, or 0.36 per cent, to Rs 112.05 per kg in business turnover of eight lots.
Likewise, the metal for delivery in July traded lower by 35 paise, or 0.32 per cent, to Rs 110.65 per kg in 285 lots.
Globally, zinc fell 0.5 per cent to USD 1,859 per tonne at the London Metal Exchange.
Market analysts said besides sluggish domestic demand in the domestic spot market, weak global trend following unexpected decline in China’s exports and importers, raised concern that slowing economic growth will hurt metals demand, mainly influenced zinc prices at futures trade. (PTI)
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