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China's exports improve and its iron ore imports grow

China's exports improve and its iron ore imports grow

Amidst all the gloomy talk,  there was some actual news today and it was positive. China's exports improved and its iron ore imports grew


Iron ore imports


China's iron ore imports jumped sharply to 96.3m tonnes in December. This late surge put total iron ore imports for 2015 up 2% on 2014. Port stock piles rose during December so this would have explained some of the monthly surge but at 93m tonnes, they  were  still  5% down on the end of last year.

Now don't get me wrong, I'm not making the case for being bullish iron ore. Seaborne export supplies are rising with big increases expected over the next couple of years. China's steel production is also falling. For the 11 months to November it was down 2% compared to last year.

What these figures do imply, is that while steel production and total iron ore demand are falling, China's domestic production is being cut and replaced with cheaper imported product. There is a lot further to go but this is a small positive step in the right direction for Australian and Brazilian iron ore miners.


Trade Data


The year on year decline in China's exports was reduced to 1.4% in December. The trend is improving with the 4 month average being better than the 6 month. This reflects China's improving share of weak global demand. Another positive for China is that its domestic share of export value is improving. This is because its manufacturing industry is moving up the value chain.Bloomberg reports that  of every export dollar earned, 70c now comes from domestic production and only 30c from imported components being re exported. This compares to a 50:50 split in 2006

Again, incremental steps in the right direction that might be a positive for sentiment on China related currencies like the Aussie and Kiwi Dollars as well as for stock markets.

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