By Clyde Russell
LAUNCESTON, Australia- The return of China’s key manufacturing index to positive territory for the first time in six months has sparked optimism that commodity demand from the world’s biggest buyer of natural resources is poised to accelerate.
The official purchasing managers’ index (PMI) rose to 50.8 in March from 49.1 in February, rising above the 50-level that separates growth from contraction, and hitting the highest mark since March 2023.
The data, released on March 31, also exceeded the median forecast of 49.9 in a Reuters poll, providing an upside surprise that further boosted positive sentiment for the world’s second-largest economy.
Manufacturing is a key segment of China’s economy and a major demand center for metals such as copper and steel, as well as energy required to make goods.
The PMI added to other recent data that suggest China’s economy is gaining some momentum after struggling for growth in 2023.
Retail sales and factory output beat expectations in the January-February period, rising 5.5 percent and 7.0 percent respectively, while exports gained 7.1 percent in the first two months of the year from the same period a year earlier.
However, the property sector remains a concern, with sales by floor area sliding 20.5 percent in the January-February period from a year earlier, only slightly better than the 23.0 percent fall recorded for December.
However, the overall picture is that China’s economy does appear to have gained traction, and ongoing stimulus measures are likely to secure the momentum.
Working out how that translates into commodity imports is far more tricky.
If anything, it appears imports of major commodities have front-run the economic recovery.
China’s iron ore imports were 8.1 percent higher in the first two months of the year, coming in at 209.45 million metric tons, according to official data.
