Key Takeaways
- China consumes 50%+ of global steel, aluminum, and copper
- Chinese PMI data moves commodity prices more than supply disruptions
- Property sector = 25-30% of China GDP = key commodity driver
- Beijing stimulus announcements create instant commodity rallies
- Caixin vs. Official PMI — learn which one traders actually trust
The Factory of the World
Let's start with a number that should make your jaw drop:
China used more cement between 2011-2013 than the United States used in the entire 20th century.
Read that again. Two years of Chinese construction vs. 100 years of American building. And that's just cement.
"When China builds, the world digs. When China slows, the world bleeds."
— Commodity Trading Wisdom
China isn't just a big consumer. It's THE consumer. The marginal buyer that sets the price. Every mine, every oil field, every soybean farmer on the planet cares about one thing: What is China doing?
The Staggering Numbers
Here's what China consumes as a percentage of global supply:
Steel: 54%
More than half the world's steel goes to China. Skyscrapers, bridges, cars, ships.
Copper: 52%
Electricity grids, EVs, electronics. China's electrification = copper's destiny.
Iron Ore: 70%
Australia's economy basically depends on Chinese steel mills buying their rocks.
Aluminum: 56%
Everything from iPhones to aircraft. China makes and consumes more than anyone.
When China's PMI drops 2 points, commodity traders worldwide lose sleep. When China announces stimulus, commodity futures gap up overnight.
The Property Obsession
Want to understand China commodities? Understand one thing: Property.
Real estate and construction account for roughly 25-30% of Chinese GDP. More importantly, property is where Chinese families store their wealth. There's no property tax. The stock market is a casino. So families buy apartments. Lots of them.
Every Apartment = Commodity Demand
A single Chinese apartment needs steel, copper, aluminum, cement, glass. Multiply by millions of units per year. That's why property data moves commodities.
When Evergrande (China's largest developer) wobbled in 2021, iron ore dropped 40%. Not because there was more supply. Because traders knew: fewer buildings = less steel = less iron ore demand.
The Data That Moves Markets
Commodity traders have Chinese economic calendars tattooed on their brains. Here's what matters:
Manufacturing PMI
Released: 1st of each month. Watch: Above 50 = expansion = bullish commodities. Below 50 = contraction = bearish.
Caixin PMI
Released: 2-3 days after official. Why it matters: Surveys private companies, considered more reliable than government data.
Fixed Asset Investment
Released: Monthly. Watch: Infrastructure + property investment = direct commodity demand signal.
Import Data
Released: ~10th of month. Watch: Iron ore, copper, crude oil import volumes = actual demand, not just surveys.
The "Li Keqiang Index"
Even China's former Premier didn't trust official GDP. He looked at electricity consumption, rail freight, and bank lending. Smart commodity traders do the same.
The Beijing Put: When China Stimulates
Here's the cheat code: When China's economy slows, Beijing panics. And when Beijing panics, it stimulates. And when China stimulates, commodities explode higher.
Watch for these stimulus signals:
RRR Cut
Reserve Requirement Ratio cut = banks can lend more = more infrastructure projects = more commodity demand.
Infrastructure Push
Special bonds for highways, railways, airports. Direct commodity demand. Announcements often gap copper/steel up 5%.
Property Easing
Mortgage rate cuts, down payment reductions. Signals more construction coming = bullish all building materials.
Consumer Subsidies
EV subsidies, appliance subsidies. Bullish copper (EVs use 4x more copper than traditional cars).
"Don't fight Beijing. When the Politburo decides to stimulate, commodities go up. Period. The scale of their firepower is unlimited."
— Commodity Hedge Fund CIO
Case Study: Iron Ore's Wild Ride
Nothing shows China's power over commodities like iron ore. Let's trace the drama:
What happened? COVID hit. China recovered first. Beijing unleashed massive infrastructure stimulus. Steel mills ran full blast. Iron ore demand exploded. Price nearly tripled.
Then Evergrande happened:
Same mines. Same supply. Only China demand changed. That's the power of the dragon.
The Copper-China Connection
Copper is called "Dr. Copper" because it supposedly has a PhD in economics — its price predicts global growth. But really, copper has a PhD in Chinese economics.
China consumes 52% of global copper. But here's what makes it even more important:
- Grid Investment: China is building the world's largest power grid. Copper everywhere.
- EV Revolution: China makes 60% of global EVs. Each EV uses 80kg of copper.
- Renewables: Solar panels, wind farms — all copper-intensive. China leads deployment.
- Property: Air conditioning, wiring, plumbing — copper in every apartment.
The Copper Trade Setup
Chinese PMI above 52 + property sales recovering + infrastructure bond issuance rising = load up on copper. This combo has worked for 20 years.
How to Trade the Dragon
Professional commodity traders have China dashboards. Here's what to build:
Track the Calendar
Know when Chinese data releases. Position beforehand. The moves are fast — you need to be ready.
Watch Property
Property sales, housing starts, developer bond prices. Property leads everything else by 3-6 months.
Monitor Inventory
Shanghai Futures Exchange inventories, Dalian Commodity Exchange data. Rising inventory = demand slowing.
Follow the Politburo
Meetings in April, July, October, December set policy direction. Stimulus signals come from here first.
China isn't just the world's factory. It's the world's marginal commodity buyer. Until another country industrializes 1.4 billion people at this speed, China data will remain the most important input for commodity traders. Ignore it at your peril.