Markets

China Exports Fall Most in Seven Months

Published

8 years ago

October 13, 2016

China Exports Fall Most in Seven Months

China’s exports dropped the most since February as global demand remained tepid, adding to pressure to the yuan, which is near a six-year low.

Key Points

Exports fell 10 percent from a year earlier in September, the customs administration said Thursday
Imports declined 1.9 percent
In yuan terms, shipments declined 5.6 percent, imports rose 2.2 percent
Trade surplus fell to $42 billion

Big Picture

Lackluster trade data may increase pressure on the yuan at the same time new property curbs challenge the resilience of the nation’s economic recovery. Third-quarter growth probably held up at 6.7 percent for a third straight quarter, according to a Bloomberg survey of economists before the official report due Oct. 19.

Economist Takeaways

The data are “consistent with a significant slowdown in global trade volumes,” said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong. “China is running out of options and letting the RMB go is the lowest cost option for them. We’ve seen them move in this direction after getting past the formal SDR inclusion date. There’s more work to do.”

“The numbers cut against the view that stronger competitiveness from a weaker yuan and more demand as U.S. households strengthen will return exports to a growth path,” Bloomberg Intelligence economists Fielding Chen and Tom Orlik wrote in a report. For the yuan, “shrinking exports will add to fears it has further to fall.”

“The export backdrop merely underlines some of the downside risks to GDP growth,” said Michael Every, head of financial markets research at Rabobank in Hong Kong. “Expect the yuan to move down with it. China is still being kept afloat by a housing bubble and massive state stimulus.”

“The expectation of a weaker yuan won’t have a big impact on trade in the next two months, since the effect of depreciation on trade is diminishing,” said Zhu Qibing, chief macro economy analyst at BOCI International (China) Ltd. in Beijing. “Exports are likely to return to positive in October at the earliest as Christmas orders come in.”

Falling exports to the European Union and U.K. suggest the downside risks to China’s economic recovery from Brexit can’t be ignored, said David Qu, a markets economist at Australia & New Zealand Banking Group Ltd. in Shanghai.

The Details

Exports to EU fell 9.8 percent, U.K. shipments slid 10.8 percent, U.S. down 8.1 percent
Crude oil imports rose to a record as a new strategic reserve site became operational
Steel exports shrank for a third month to the lowest since February
Yuan depreciation’s impact on trade is limited, customs spokesman says at a briefing
Yuan has dropped 3.4 percent against the dollar this year, the biggest decline in Asia, and weakened 6.2 percent against a 13-currency trade-weighted index
The People’s Bank of China on Thursday weakened the daily reference rate for the seventh day in a row, the longest weakening run since January

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Energy

Dangote’s Allegation of Refinery Boycott By Marketers False, Says IPMAN President

Published

2 hours ago

October 30, 2024

Ugwoke Ogbodo

The President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Garima, has expressed shock over business mogul, Aliko Dangote’s allegation that marketers were boycotting his refinery.

Dangote, the owner of a $20bn refinery had claimed that oil marketers in Nigeria have been avoiding his refinery for imported petrol.

He had lamented that such a move would impact negatively on the country’s economy and would discourage local investment.

Responding, however, IPMAN President said the allegations were false.

According to Garima, while speaking on a live telephone programme monitored by Investors King on Wednesday, IPMAN members are not importing petrol.

On the contrary, he disclosed that oil members can’t load petrol from the Dangote Refinery in Lagos despite having paid ₦40billion to the Nigerian National Petroleum Company Limited (NNPCL).

He said rather than get Dangote petrol through the NNPCL, the private refinery should register independent petrol marketers directly for smooth loading of the product.

The IPMAN boss noted that if Dangote could be able to sell the product to oil marketers directly, they can buy the product.

He expressed frustration in the fact that marketers had to pay before they pick, adding that “Presently, we have ₦40bn under the NNPCL custody but we cannot source the product.”

Garima explained how some marketers that NNPCL sent to load in Dangote refinery stayed with their trucks for four days, and they cannot load.

Energy

Ghana to Source Fuel from Dangote Refinery in 2025

Published

9 hours ago

October 30, 2024

Yetunde Olugbenga

As part of efforts to reduce the cost of Premium Motor Spirit (PMS), commonly known as petrol, Nigeria’s neighbouring country Ghana has expressed readiness to start buying from Dangote Refinery in the first quarter of 2025.

Chairman of the National Petroleum Authority Ghana, Mustapha Abdul-Hamid announced this at the Oil Trading and Logistics (OTL) Africa Downstream Oil Conference held in Lagos, Nigeria.

Abdul-Hamid categorically said that Ghana will purchase fuel from Nigeria once the Dangote refinery begins operation fully.

According to him, the projected 650,000bpd daily production is too much for Nigerians to consume. Hence, Ghana could benefit from the surplus production, allowing both countries to collaborate more closely in the energy sector.

Currently, importing petrol from Rotterdam has made fuel prices relatively high in Ghana due to unfavorable exchange rates.

“If the refinery reaches its 650,000 bpd capacity, all that volume cannot be consumed by Nigeria alone, so instead of us importing as we currently do from Rotterdam, it will be much easier for us to import from Nigeria, which I believe will help bring down our prices,” Abdul-Hamid stated.

By sourcing petrol from Nigeria, Ghana hopes to mitigate logistic costs and benefit from a more favourable pricing structure.

Ghana buys $400 million worth of petrol from Europe monthly, which over the years has impacted the commodity pricing in the West African country.

Abdul-Hamid further said the volatility of the Ghanaian cedi against foreign currencies led to increased costs for fuel.

Additionally, buying from a neighboring country would reduce the exchange rate impact on petrol prices, significantly lower fuel costs, and reduce the prices of other goods.

“The reduction in freight expenses would help bring down the prices of various goods, positively impacting Ghana’s broader economy,” he concluded.

Crude Oil

Crude Oil Prices Dip Further as Israel Plans End to Lebanon Conflict

Published

10 hours ago

October 30, 2024

Iyanuoluwa Martins

Oil prices extended losses on Tuesday after Israel signalled a diplomatic solution to the war in Lebanon, adding to a more than 6 per cent drop in the previous session on Monday after Israel carried out its retaliatory strike on Iran at the weekend

Brent crude futures settled down 30 cents, or 0.4 per cent at $71.12 a barrel while the US West Texas Intermediate (WTI) crude shed 17 cents, or 0.3 per cent to $67.21 a barrel.

Israel’s Prime Minister, Mr Benjamin Netanyahu will hold a meeting on Tuesday evening with ministers and the heads of the country’s military and intelligence community about talks for a diplomatic solution to the war in Lebanon.

Recall that Israel is currently embroiled in fighting with two separate groups, Hamas and Hezbollah backed by Iran in the Middle East.

Meanwhile, Iran said it will use all available tools to respond to Israel’s weekend attack. If this happens, it could create a fresh wave of tensions.

Also pressuring prices is the declining oil demand from China, the world’s largest crude oil importer, which continues to impact global oil consumption and prices.

Market analysts note that demand will return to normal growth rates after Chinese President Xi Jinping introduces new stimulus measures to the economy.

According to the American Petroleum Institute (API), crude oil inventories in the US fell by 573,000 barrels for the week ending October 25. The API reported a 1.643-million-barrel build in crude inventories for the week prior.

So far this year, crude oil inventories in the world’s largest oil producer have slumped by just over 6 million barrels since the beginning of the year, according to API data.

Official US government data from the Energy Information Administration (EIA) is expected later on Wednesday.

The US Federal Reserve will cut interest rates by 25 basis points on November 7. Lower interest rates cut the cost of borrowing, which can buoy economic activity and boost oil demand.