Sector movers: Miners rise on signs of good Chinese demand (for now)

8th Nov 2016 13:38

(ShareCast News) - The largest bulk metals miners again paced gains on the market on Tuesday despite data showing falling imports of copper and iron ore from China, for instance.That was because analysts said the latest official Chinese trade data were more nuanced than the headline figures might appear to indicate, although on a more more medium-term view some of those same analysts expressed caution.China's imports of unwrought copper fell by 15% month-on-month in October to just 290,000 kt - the least since mid-2011.However, Kevin Norrish at Barclays Research said: "A recent pickup in domestic copper prices compared with those on the LME, alongside increases in local physical premiums, suggests that destocking may have contributed to the lower figures in October and that copper imports are likely to have picked up again in November/December."Similarly, iron ore imports slumped by nearly 12m tonnes to only 80.8m tonnes.Nonetheless, rough weather conditions at the Chinese port of Qiingdao - which typhoons caused delivery delays - were likely a factor, Norrish added.Furthermore, declines in exports of finished steel suggest China is having to export less of its steel surplus and that domestic demand may have picked up again recently, the Barclays analyst said.The above trade numbers saw Chinese rebar futures close at $458.6 a metric tonne, up from $450.4 a tonne, while iron ore futures for January jumped 2.3%.Lookng further out however, Norrish said: "We remain wary of a slowdown in important commodity consuming sectors of the Chinese economy since the effect of this year's stimulus will fade at some stage, but in our view, at present, underlying demand conditions still appear to be good.""The recent rally across almost all metals and bulk commodity markets has served to further relieve the pressure for supply cuts that was so prevalent at this point last year. Indeed, prices are now at a level where the vast majority, if not all supply in many markets is now making money given the ongoing cost reductions seen."With this, we expect to see a positive supply reaction from those where there is short-run elasticity. However, in many cases current prices remain close to or below our long-run forecasts, most notably for base and precious metals. As a result, we do not expect to see a resurgence in growth projects approved over the near future," analysts at Macquarie chipped in.Top performing sectors so far todayIndustrial Metals & Mining 2,052.47 +5.15%Food Producers & Processors 7,892.16 +2.85%Mining 14,120.96 +2.17%Forestry & Paper 17,374.20 +2.09%Construction & Materials 6,374.51 +1.36%Bottom performing sectors so far todayTechnology Hardware & Equipment 899.25 -2.59%General Retailers 2,517.22 -0.60%Tobacco 53,063.10 -0.43%Aerospace and Defence 4,480.95 -0.39%Oil Equipment, Services & Distribution 14,049.69 -0.33%