Commodities & the trade war in 10 charts

As the trade skirmish between the United States and China continues, concern around the impact on markets heightens. 

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Free trade is under stress globally as the European Union, China and the US put retaliatory tariff measures in place.

"ANZ Research foresees minimal impact from the current conflict on the underlying fundamentals of commodities.”

The good news: ANZ Research foresees minimal impact from the current conflict on the underlying fundamentals of commodities.

Indeed, ongoing supply-side reforms in China are having a greater impact on trade. With domestic output impacted, imports into China look likely to remain strong.

China is also taking a more-proactive stance on fiscal policy which should support domestic demand in the short term.


China has become less dependent on external trade in general compared to five or 10 years ago and is also less leveraged to commodities. 

Trade flows are being impacted, such as falling US imports of key commodities into China. Premiums in China are weakening as consumers pull back from restocking amid the uncertainty.

US tariffs on steel imports are driving up prices stateside, while US aluminium premiums have surged to record highs. 

Commodity exports from China appear unaffected. In fact, steel exports have been rebounding in recent months, clearly benefitting from US tariffs. 

Retaliatory action by China has also impacted soybean markets.

Chinese consumers are also holding back on purchases of copper, which is weighing on premiums. Manufacturers are less keen to build inventory. 

Investors are also concerned the trade conflict is moving into the currency market.

However supply side reform measures are constraining Chinese domestic supply, which is having a big impact.  This is resulting in strong growth in imports of most commodities.

Concern over the impact of the tariffs has seen China boost fiscal spending to support domestic demand. 

Daniel Hynes is a senior commodities analyst at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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