RPT-COLUMN-Best commodity bets? Exposed to China and less open to trade – by Clyde Russell (Reuters U.S. – August 16, 2018)


LAUNCESTON, Australia, Aug 16 (Reuters) – The recent gyrations in the world economy around Turkey’s currency and the escalating U.S.-China trade dispute have taken a toll on commodity prices, especially industrial metals.

However, while news-driven sentiment can clearly pummel markets, over a longer period of time not all commodities will be equally affected by the changing global economic dynamics. The key to which commodities are likely to perform better is China, which is the world’s largest commodity importer.

Even if the Chinese economy does struggle under the weight of the trade barriers erected by U.S. President Donald Trump, there are still likely to be commodities that can hold their own. The key is to look for commodities that are likely to remain in relatively high demand, and are subject to supply constraints.

On this basis, coal becomes the darling of the commodity complex, as Chinese import demand has been robust and will likely remain so as Beijing cuts back on domestic output as part of efforts to cut pollution.

China’s coal imports surged 15 percent to 175.2 million tonnes in the first seven months of the year from the same period last year, according to customs data.

For the rest of this article: https://www.reuters.com/article/column-russell-commodities/rpt-column-best-commodity-bets-exposed-to-china-and-less-open-to-trade-russell-idUSL4N1V72K6

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