New Investing Opportunities Open up With China’s Trade Offer There are new investing options that could open up in the commodities segment if China’s trade offer to the United States materializes.
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Perfection in investing and stock trading comes with experience, but you need a great deal of intuition as well to identify the opportunities. Often, there are political and global factors playing a big part. China has brought about a breakthrough in the trade war tensions by proposing to increase its purchases of goods from the United States this year by around $25 billion. The areas in which they propose to make a difference are coal, crude oil and farm products. This is a clear indication that the talks are progressing, and for investors and stock traders this indicates that commodities are going to be massive beneficiaries of China’s decision. These were thought to be victims of the trade war, but now they’ll be perceived as winners. American exports to China amounted to $130 billion last year. China’s exports to the United States stood at $506 billion though, giving the US a deficit of over $375 billion to make up. So let’s take a closer look at some of these commodities that could be experiencing great breakthroughs.
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Coal China tops the list of coal consumers as well as coal producers. The bulk of coal imports come from Indonesia and Australia. If China increases its purchase of American coal, Bloomberg reckons the mines in the Appalachia region could be significantly boosted since the majority of the United States’ coal exports to China are generated from this region, as per data from the US census. According to Bloomberg Intelligence analyst Michelle Leung, China’s American coal purchases could triple, rising to nearly $1.3 billion this year. Crude When it comes to crude, China has already been helping the United States, having increased its purchase of American crude to 224,000 barrels per day last year. That’s a rocketing rise from the 1,000 barrels it was purchasing in 2015. That was when the US had lifted its restrictions on exports. China was easily the second largest importer of US crude in 2017. But looking at the overall picture, China is the world’s largest oil importer and US imports make up for a very small percentage of it. China spent only $3.16 billion on US crude imports out of the $162.3 billion www.tradezero.co
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it spent on crude purchases overall in 2017. So there’s still a big difference China can make by increasing its US crude imports. LNG China is set to become the largest LNG (liquefied natural gas) importer in the world in the coming decade. And you already have various American export projects being proposed. They are in the hunt for finding long-term buyers for financing construction. The new push by China could see a big boom here. According to Bloomberg New Energy Finance, China’s yearly LNG imports could rise to 82 million tons by 2030. But its current long term contracts would make up for only 42.5 million tons by 2030. So there’s more supply needed to fulfill the requirements, which gives opportunities for new American exporters. Soybeans Agriculture was one of the areas considered to be affected significantly if China were to go ahead with tariffs on American exports. But now, with China’s u-turn, agriculture could stand to gain significantly. China is the major soybean importer in the
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world and also the largest buyer from the United States, importing worth $14 billion in 2017. However, the majority of China’s imports came from Brazil. According to Shanghai JC Intelligence Co, China could raise its US soybean imports to somewhere between 40 million and 50 million tons from the 33 million tons it imported in 2017. So these are some of the promising commodities that analysts believe would gain significantly if China’s amicable plans to increase US imports go ahead.
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