Trade Balance And Commodity Imports
Average monthly surplus for the two-month period was US$106.81 billion, below December’s US$114.11 billion, due to faster import growth. Commodity import volumes increased year to date by February, including copper ore, iron ore, coal, crude oil and refined petroleum products. Higher commodity volumes suggest stock building as Middle East tensions rose and could affect supply. For 2026, exports are forecast to grow 2.8% in US dollar terms (2025: 5.5%) and imports 2.0% (2025: flat). The surprisingly strong Chinese trade data from early this year challenges the slow-growth narrative we saw building in late 2025. We’ve already seen China-focused ETFs like the MCHI rally over 4% in the past week on this news. Traders should consider buying call options or bull call spreads to capitalize on this renewed momentum. China’s move to build inventories due to Middle East risks is a clear signal for commodity markets. Brent crude is now trading firmly above $95 per barrel, partly because Chinese imports hit a record volume for the Jan-Feb period. Going long on oil and industrial metals like copper, which just broke $9,000 per tonne, seems prudent. The strength in Chinese demand directly supports commodity currencies, especially the Australian dollar. The AUD/USD has pushed to a five-month high above 0.6850 as iron ore prices surged, a pattern we also saw during the stimulus talk in 2024. This makes long AUD positions attractive against currencies with weaker fundamentals.Market Implications And Positioning
The physical movement of these goods is being reflected in global shipping costs. The Baltic Dry Index has risen 15% over the last month, confirming the scale of China’s import activity. This suggests the demand is real and is creating ripple effects across the logistics sector. We must also note the forecast for much slower growth for the rest of 2026, with export growth projected to fall to just 2.8%. This suggests the current rally could be a short-term reaction to the Jan-Feb data surprise. Consider using calendar spreads to profit from the immediate strength while hedging against a potential slowdown in the second quarter. Create your live VT Markets account and start trading now.
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