Chinese exports for the month of March surged 35.8% on a yearly basis. The chart below provides a snapshot of Chinese demand in a month where the Middle East went into turmoil and where Japan suffered a natural catastrophe followed by a lingering nuclear crisis.
China accounts for between 38.1% and 48.2% of global demand for base metals and 21% of bullion demand. The interesting part for me as an oil and gas investor is the last figure, 10.2% of global oil demand. This tells me 2 things:
- As China’s economy continues to grow, there is a lot of upside for this figure to grow even faster.
- In the event of a slowdown in China, the downside on oil would be less pronounced compared to base metals for example. Demand for oil could potentially be filled by other emerging countries.
It’s a great chart if you ask me, much more upside than downside for oil. More importantly, given the current state of the market this chart indicates that the Chinese domestic economy is healthy and that the world economy is doing better since someone is importing all the goods being produced in China. The latest Chinese economic data have been positive with Q1 GDP, March Retail Sales and March Industrial output coming in above expectations.
It’s not all doom and gloom out there….what do you think?