China's trade surplus reaches record level

Friday, August 08, 2014

Chinese trade data released overnight presented a record trade surplus as export growth continued to accelerate throughout July. Market participants polled by Bloomberg had been expecting a $27.4bn surplus in July but were surprised on the upside with a $47.3bn surplus, providing further indication that global demand appetite was steadily improving. Exports surged 14.5% y/y throughout the month against expectations of 7.0% y/y growth while imports fell 1.6% y/y in July, slowing from a 5.5% increase seen during the previous month. The trade surplus shored up support for mainland benchmark indices and fuelled further speculation that Beijing may continue to accommodate further stimulus in order to reach the 7.5% growth target for the year.

Brent futures rose above $106/bbl for the first time this week in early morning trade as President Obama authorised air strikes in Iraq, sending front month prices towards $106.85/bbl on supply concerns. Activity had been relatively subdued throughout the week with prices trading between $104.50-105.50 for the most part before finding firm support towards the end of the week. Conflict and escalating violence in the second largest oil producer in OPEC had spread throughout most of northern Iraq in recent months, with the oil rich southern region relatively untouched, however, concerns of new attacks on production facilities have supported the risk premium with the potential for further upside towards late July’s range between $106.80-108.40.

Copper prices remained on track to close lower for a second straight week after Chinese trade data showed imports of the red metal fell to their lowest levels since April last year. According to the customs administration, imports of unwrought copper and copper products declined for a third consecutive month, totalling 340K tonnes in July from 450K tonnes in April. The weaker import statistics saw three month LME copper prices slip back from $7,000/tonne in overnight trading, finding near term support at the 50 day MA. Prices have declines 2.7% throughout the month and 5.8% since the start of the year, making it one of the worst performing metals trading on the LME.  

China's trade surplus increases to $47.3bn in July

CNFRBAL Index China Imports 2014 08 08 07 51 57

Copper imports fall for a third straight month

CNIVCOPP Index China Import Com 2014 08 08 08 11 43

3-M LME copper prices slip towards the 50 day MA 

LMCADS03 Comdty LME COPPER 3 2014 08 08 08 15 49

Events for today

0245

CN

Jul

Trade Balance

0700

DE

Jun

Trade Balance

0930

UK

Jun

Goods Trade Balance

1330

US

Q2

NF Prod. & Labour Costs

0230

CN

Jul

CPI & PPI (09/08/14)

LT:  

Aug  Gasoil (ICE) 

OE: 

Sep  Coffee (NYBOT) 

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