China Basic Materials: Dec NBS Data – Exports and Trade-in Subsidies Support Metals Demand, Albeit with Diminishing Effect
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
JPMorgan observes that China's full-year 2025 GDP growth of 5.0% was heavily supported by consumer stimulus measures under the trade-in policy. However, commodity markets exhibited significant divergence. Metals driven by global demand, such as gold, copper, and lithium, outperformed domestic-demand sectors like coal and steel. Supply disruptions, production restrictions, and industry consolidation remain dominant themes expected to persist through 2026.
December National Bureau of Statistics data highlights ongoing domestic weakness. Real estate starts fell 20% year-over-year, and fixed asset investment declined 3.8% for the full year. While crude steel output dropped 10.3% in December, finished steel exports surged 16% year-over-year to a record 11.3 million tons, driven by weak domestic demand and front-loading ahead of new export licensing controls. Profitability for Chinese steel mills saw a slight improvement, supported by lower coking coal prices.
Looking ahead to 2026, expanded trade-in subsidies will continue to provide meaningful, albeit gradually diminishing, support for commodity demand. JPMorgan believes the post-Chinese New Year period will serve as a critical demand validation checkpoint. The bank maintains a sector preference ranking of gold and copper, followed by aluminum, lithium, coal, and steel. JPMorgan expects the materials sector to continue outperforming the broader MSCI China index, favoring Zijin Mining for outright purchase and recommending investors buy Aluminum Corporation of China and Hongqiao on market dips.