China Sets Commodities Records in Good Sign for Growth

(Bloomberg) -- If you’re looking for signs of China’s slowdown, you won’t find much in the data for output of the commodities needed to power and build the world’s second-biggest economy.

Production of a swathe of materials -- from crude steel to coal and aluminum -- reached record levels in June, contributing to stronger-than-expected industrial output even as the wider economy expanded at its slowest pace since the early 1990’s. While each market has its own dynamics, the burst of heavy-industry activity supports the idea that policy action is stabilizing growth and boosting expectations for the second half of the year.

“It reflects confidence from the commodity producers,” Helen Lau, analyst at Argonaut Securities Asia Ltd., said by phone from Hong Kong. “Even though June is the start of a weak season, cyclically speaking, they still want to produce because they basically expect that going forward, things will be back on track.”

China Sets Commodities Records in Good Sign for Growth

The strong output data slots into signs of tentative stabilization in Monday’s economic figures, with infrastructure spending and manufacturing investment both also picking up. Better-than-expected retail sales may point to an improvement in the property and auto sectors -- both a vital source of commodities demand.

Highlights from NBS output data:

  • Crude steel production rose 10% from a year earlier and average daily production reached a record. Run-rates were equivalent to more than a billion tons a year.
  • Coal output rose 10% from a year earlier.
  • The country’s oil refineries and aluminum smelters were running at record rates, measured by average daily output.
  • Production of crude oil was at its highest in two years.

©2019 Bloomberg L.P.

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