Trade statistics present an awkward problem for the cheerleaders in financial markets. They show what is really happening in China's economy, rather than what the analysts would like to happen.
Polyethylene is the bellwether product for the economy. And latest trade data from Global Trade Information Services suggest caution over H2 prospects. As the chart shows for the January - July period:
• Overall demand in 2012 (red column) has been flat since 2010 (blue)
• China has increased its own production by 3% over the period
• Imports are thus down 1%
On the positive side, the data does show a modest 1.7% increase in overall 2012 demand versus last year. But this raises further questions, as it is well below Q2's reported 7.6% GDP growth. Normally, PE demand grows in line with GDP.
Import patterns also continue to show contrasting trends:
• Middle East imports are up 40%
• SEA imports are up 27%
• NEA are down 32%; NAFTA down 53%; Europe down 64%
The big winners are Thailand (up 131% due to its new capacity), Iran (up 24%) and Saudi (up 23%). The main losers are the USA (down 56%); Taiwan, Germany, Benelux (all down 47%); and S Korea (down 21%).
No doubt those promoting China as the investment opportunity of a lifetime will continue to promise great things by the end of the year. But the blog will continue to keep its own money in the JUUGS for the moment.