Higher Chinese exports spell more Australian sales

Rising manufacturing shows China GDP is stable.

a woman

Just when the talk was that China may have peaked, causing a chill throughout the Australian economy, initial data and market sentiment coming out of the Chinese manufacturing industry is beginning to tell a different story.

As we reported earlier this month, the shipments of iron ore that China was holding off on for some time, hopefully to deflate prices, now can be clearly seen as flowing out of Australia, with exports up 33% compared to last year.

The giant Chinese steel industry needs the basic ingredients of iron ore and coking coal, so just like in a recipe, you have to assemble them before you can make your finished product. In this case, Chinese makers have already exported 43% more steel compared to last year, so they will have to replenish their supplies.

Coal imports have not been as strong, and that is reflected in the current spot prices, and further news stories about the troubles Australian coal producers are having point to that relative weakness. Australia accounts for 38% of all Chinese coal imports, but like iron ore, when the inventory gets low, the orders will come back.

Peabody Energy (NYSE: BTU), which just announced more layoffs at one of its Queensland coal mines, has projected that by 2017 global coal demand will rise from the current 7.7 billion tonnes to 8.9 billion tonnes, adding that 80% of the growth estimate will come from China and India.

Chinese factory output in general was up 10% in August compared to August 2012, retail was up 13.4% for the last 12-month period and the first eight months of 2013 saw a 20% increase in investment.

The Chinese government has set a 7.5% GDP growth target, and initiated action to stimulate railway investment and public housing construction. In addition, the central bank is easing lending to get business flowing and improve consumer confidence to spur on consumption.

Foolish takeaway

Noticing trends in stock prices is one way to spot strong growing companies, and you as an investor can do this easily every day. The real trick is to find out what those companies need for their production or how those products are used by the next company.

Learn about leading indicators for an industry, and when the headline news is sour, yet you are seeing the start of increased orders, production or shipping, you know that in due time the earnings will go up. That’s the point when you can buy stocks cheaply, and make your rate of return higher.

Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »