A big drop in China exports has the commodity complex fearing demand destruction drops more than geo-political risk. Forget about Ukraine, Libya, a strong U.S. Jobs report or the possibility of a terrorist blowing up a Jet from Malaysia, it is about China in the early trade.
Chinese exports plunged tanked by a shocking 18.1% leading to a 23 billion dollar trade deficit. The markets are trying to adjust to a shaky new Lunar New Year. Oh, sure, some blame the holiday but after getting one China company default it is possible that China is headed towards a very hard landing.
The reason why this is so shocking is just one month ago China trade expanded by 10.6%. We saw copper imports were soaring. Still China Copper Imports were up January through February was up 41.2% but in February fell 29%.
China's consumer prices rose 2% in February at their slowest rate in 13 months. So it does give some room to stimulate if need be but one of the reason prices fell was pork prices fell by 9%. Pork prices are again on the rise as the Porcine Epidemic Diarrhea virus is devastated the U.S. pig crop. Producer prices fell for the 24th consecutive month by dropping 2%, slightly above forecasts for a 1.9% drop leading to more concerns that China is having a hard time keeping things together.
Add to that Japan revised down its growth estimate for the final three months of last year after announcing a record current account deficit for January. Japan's Cabinet Office said both private and public demand was lower than its earlier estimate.
Reuters is reporting that armed protesters in eastern Libya traded threats with the government on Sunday in a tense stand-off over the unauthorized sale of oil from a rebel-held port. A North Korean-flagged tanker, the Morning Glory, docked on Saturday at the port of Es Sider and local daily al-Wasat said it had loaded $36 million of crude oil. Prime Minister Ali Zeidan has said the military will bomb the 37,000-tonne vessel if it tries to leave.
Officials said on Sunday that the navy and pro-government militias had dispatched boats to stop it from getting out. The rebels said any attack on the tanker would be "a declaration of war." The escalating conflict over the country's oil wealth is a sign of mounting chaos in Libya, where the government has failed to rein in fighters who helped oust veteran ruler Muammar Gaddafi in 2011 and who now defy state authority.
The protesters, who also include former soldiers and ex-oil guards led by a former anti-Gaddafi commander, Ibrahim Jathran, have seized three eastern ports in the OPEC member country. The Defense Ministry issued orders to the chief of staff, air force and navy to deal with the tanker.