A peek at five often forgotten raw materials markets highlights how China's stuttering recovery extends to almost every nook and cranny of its economy.
Investors parse the state of China's demand for commodities like crude oil and copper. But the world's second-biggest economy is also home to a broad range of markets that trade lesser-known products. Although they may not attract Wall Street analysis, they are still recognizable as important building blocks of an economy.
Futures markets for items such as glass, styrene and corn starch are piling on the evidence that China is not recovering as quickly as many people expected, after Beijing abandoned the pandemic restrictions late last year that were destroying its economy.
China is China's main contributor to the world s plate glass industry, fueled by the rapid growth of high-rise buildings and vehicle sales in recent years. Low margins and supply gluts have prompted producers to reduce output in recent months, causing them to struggle with production.
The situation in this year is even more challenging, as compared to previous years. In the past month, glass futures on the Zhengzhou Commodity Exchange have dropped nearly 20%, a period when demand usually picks up. The factors include China steetering property market and weaker-than-expected vehicle output April.
China is a nation with a vast need for natural gas, from big-projects in far-flung nations like Qatar and Australia, or through pipelines that span across continental Asia. But the last few miles to consumers is often via trucks that criss-cross China's cities, a barometer of the immediate needs of industries such as glass-makers and ceramic factories.
This price has fallen to its lowest level in almost two years. The nation's top importers of seaborne liquefied natural gas are even offering to resell their shipments abroad.
Lower home buyers also mean less demand for the purchases that often accompany a new place to live. The cost of styrene monomer, a material used for plastics and rubber that go into appliances like fridges, has decreased. China has been the world's fastest growing market in recent years, with capacity at more than 40% of the world's total.
Dalian futures fell to their lowest since February 2021, after a near-5% drop in home appliance sales in the first quarter, according to the National Appliance Information Center. The problems are slower growth in personal incomes and a low-frequency sales cycle for white goods, according to Wu Haitao, a director at the center.
Corn starch is used in soft drinks, as a thickening agent for sauces, and in the paper and textiles industries. The Chinese economy generates nearly 50 million tons of coal a year.
Although retail sales have outperformed other economic indicators in the months since China's Covid Zero restrictions were lifted, they grew at a slower rate than expected in April. China's declining population is another reason for the popularity of corn starch, a key ingredient in baby formula.
In February, Shanghai pulp futures went into free-fall after a sudden recovery in production at paper mills after the Lunar New Year holiday was augmented by resurgent imports. After China s reopening, domestic demand could not keep up.
China is the biggest producer and consumer of pulp, which is used for packaging, publishing, and household products. However, the market is so large that a lot of pulp and paper must be sourced from abroad, he said.
With assistance from Kathy Chen, Stephen Stapczynski, Hallie Gu, Stephen Stapczynski, Kathy Chen and Dan Murtaugh.
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