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By: Editorial Team, StoneX Media
China's exports and industrial output are still growing, while retail sales, investment and the property market remain weak. China agricultural demand shows no broad recovery as cautious consumers limit spending on restaurant meals, premium meat and other discretionary food. Industrial materials such as copper and aluminum draw support from the stronger half of the economy, whereas steel and cement absorb the drag from soft property. For buyers and exporters of farm commodities, China's two-speed economy means steady staple food demand but little growth at the premium end.
Joe Zhu, Lead Market Intelligence Project Manager at StoneX, has spent the past five years leading analysis of the StoneX Commodity Index and contributing to the firm's commodities market intelligence. His coverage spans China's agricultural and macro markets alongside U.S. commodity index markets, with a strong focus on quantitative analysis and data visualization.
China's export, technology and advanced manufacturing sectors are still growing, giving the stronger half of the two-speed economy genuine momentum. According to Zhu, that growth "supports factory activity, freight, power use and the demand for some industrial materials like copper, aluminum". The same engine is exposed to overseas protectionism, notably a deal China has signed with the European Union limiting its hybrid car exports. Further limits on Chinese exports would hit the one part of the economy still adding to industrial demand. For metals buyers, demand for copper and aluminum in China is tied more closely to trade policy than to domestic consumption.
Chinese consumer caution is capping growth at the premium end of food demand, even though staple food purchases continue. The property market and investment are similarly soft, limiting demand for steel, cement and construction materials. "People still have to buy food, but it does limit the growth in restaurant spending, premium meat and other discretionary food demand", Zhu explains. For meat importers, processors and food service suppliers, the pressure in China falls on higher-value cuts and restaurant channels rather than on basic volumes.
China's government has introduced targeted support for property, investment and consumption, but no broad-based stimulus program has followed. Without a wider push, the split between a growing export sector and a soft domestic economy in China has little reason to change. Feed demand offers some steadiness, since the Chinese hog herd remains relatively large despite poor hog margins. Still, the ceiling on Chinese agricultural demand holds. "For agriculture commodities," Zhu says, "I do not expect a broad recovery".
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--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Joe Zhu, Lead Market Intelligence Project Manager at StoneX
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China's growing exports and advanced manufacturing sit alongside weak property, investment and consumer spending, and the split is reshaping commodity demand. Industrial metals draw support from the stronger side, while cautious consumers limit growth in restaurant spending and premium meat.
October 15 – Inflation is the feature again today, with this morning’s headline September PPI surging to 6.3% year-on-year, sharply above the average analyst estimate of 5.3% and representing the hottest reading since December 2022. Furthermore, August was revised 0.2% higher to now show a 5.6% rise. In month-on-month terms, this was a 1.3% uptick, sharply above the expected 0.5% and marking the highest monthly increase since March 2022. Stripping back the more volatile food and energy sectors, the inflationary pressures were still significant. Core PPI surged 0.7% month-on-month, sharply above August’s 0.2% and the average analyst estimate of 0.3%. In year-on-year terms, core PPI was up 5.0%, well above the expected 4.4% gain and marking the highest level seen since 2023. As with the headline print, August core PPI was revised higher by 0.2% as well, now showing a 4.8% gain.
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