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China’s Exports Remain Tepid as Trump Trade Challenge Looms

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NEPC
  • China’s Exports Remain Tepid as Trump Trade Challenge Looms

China’s exports remained subdued as soft global demand weighed on sales, raising uncertainties for the nation’s external sector as it braces for potential trade frictions with the U.S. under a Donald Trump presidency.

Overseas shipments dropped 6.1 percent from a year earlier in December, the customs administration said Friday. Imports rose 3.1 percent, leaving a $40.8 billion trade surplus.

“External demand remains sluggish,” said Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing. “The outlook for exports this year doesn’t look very promising,” he said, citing slowing global trade amid rising protectionism and uncertainties in U.S. trade policy.

The weakening yuan, which fell 6.5 percent against the dollar last year and depreciated 6 percent against a basket of currencies, is cushioning the impact of tepid global demand but doing little to revive sales. The world’s largest exporter faces more challenges and uncertainties this year as Trump — who accused China of being a trade cheat through his campaign — is due to take office in a week.

The trade surplus, which represents demand borrowed from the rest of the world, decreased for the first time since 2011. It fell to $512.9 billion from a record $593.9 billion in 2015.

China will closely monitor U.S. trade policy after Trump’s inauguration, Customs spokesman Huang Songping said at a briefing in Beijing, citing global trends toward populist policies.

“The political landscape is changing significantly,” Huang said. “Brexit, elections in major European countries, the new president in the U.S. and the election in South Korea will all bring uncertainties to the current policies, and may add to the global protectionism trend.”

Trade still faces large uncertainties this year amid a complicated global context and downward pressure on the economy is “still big,” Huang said. Higher costs reduce trade advantages and market share is being lost to Southeast Asian nations, he said.

Another Gain

Exports in yuan terms rose 0.6 percent in December while imports posted a second-straight 10.8 percent gain. For the full year, exports fell 2 percent in yuan terms while imports rose 0.6 percent, the customs administration said.

Exports to the U.S., China’s largest trading partner, rose 5.1 percent for a second straight increase while shipments to the European Union resumed declines, falling 4.7 percent. Exports to South Korea climbed 8.3 percent for the first increase since March.

Iron ore imports by China surged to a record above 1 billion metric tons last year as unexpectedly strong steel production and lower local mine output combined to fire up demand in the world’s top buyer for cargoes from Australia and Brazil, supporting a rebound in prices.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

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COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.

This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.

In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.

The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.

Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.

She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.

She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.

Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.

“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.

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Commodities

Crude Oil, Other Commodities Closing Price for Monday

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Crude oil

Crude Oil, Other Commodities Closing Price for Monday

Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.

Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.

The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.

Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.

The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.

According to Michael McCarthy, the Chief Market Strategies, CMC Markets, the surged in gold price is a result of the projected drop in dollar value or uncertainty.

He said, “The key factor appears to be the (U.S.) currency.”

As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.

Also, the effectiveness of the vaccines can not be ascertained until wider rollout.

Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.

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