More freight, more economy - upward trend in the 4th quarter
More freight, more economy – upward trend in the 4th quarter

6 October 2022 – Positive data from China, which can also be derived from the freight volumes heading towards Asia, point to a significant revival and positive sentiment in the world’s second largest economy. Which at the same time also has an impact on the important industrial metals such as copper, zinc, aluminium and nickel, which rose across the board at the start of trading today. And US ITC extends AD/CVD orders on Chinese stainless sheet and strip.

More freight, more economy – upward trend in the 4th quarter

More and more data from various sectors point to a significant recovery in the economy. Freight rates heading to China are rising, the China Bulk Merchandise Index is at its highest level since May 2022 and the manufacturing PMI is also pointing to growth.

Stronger demand expected from China

Analysts currently expect stronger demand from China in the fourth quarter of 2022, especially in commodities such as iron ore. Weakening lockdowns and the Chinese government’s strengthening economic programmes are cited as stimulating factors. This is currently reflected not only in freight rates to Asia.

CBMI at highest level since May 2022

The last China Bulk Merchandise Index (CBMI) of 102.3 for August 2022 had already shown that the domestic bulk commodity market is on the upswing. The recently published CBMI for September even continued this trend and stood at 103.1 for September 2022. This is the second month in a row that the Chinese CBMI has reached its highest level since May 2021.

Significantly improved sentiment in the Chinese market

According to the China Federation of Logistics and Purchasing (CFLP), this indicates a significantly improved mood in the market. According to the report, industry expectations are getting better and purchasing of goods is picking up, which at the same time has a positive impact on production. The market outlook for the fourth quarter currently indicates a clearly rising trend. Already in September, a high transaction volume could be observed in the Chinese market.

PMI points to growth

According to the latest statistical data, the Purchasing Manager Index (PMI) of the Chinese manufacturing industry had also increased significantly in September and turned into the growth zone.

Industrial metals gain on a broad front

Shortly after the start of trading on the European commodity exchange LME, industrial metals continued their upward trend and gained on a broad front. Currently (8:30 GMT+1), aluminium is up approx. 1.7%, copper is up approx. 2.13%, nickel is up more than 2.5% and zinc is even up more than 3.5%.

Positive China data and lower interest rates

In the base metals, expectations of the US Federal Reserve are likely to have a significant influence, as it is expected to set possible new interest rate steps significantly lower than the last ones. The good economic data from China, the world’s second largest economy, should do the rest to fuel a positive upward trend.

US ITC extends AD/CVD orders on Chinese stainless sheet and strip

The US International Trade Commission (USITC) decided on 5 October 2022 that the existing anti-dumping and countervailing duty measures on imports of stainless steel sheet and strips from China should remain in place. Otherwise, the USITC believes that there will be renewed material injury to the US economy.

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