Futures markets for items as diverse as glass, styrene and corn starch are piling on the evidence that China isn't recovering as fast as many people had hoped
said. China accounts for more than half of the world's plate glass production thanks to the rapid growth of high-rise buildings and vehicle sales in recent decades. Similar to other industries, low margins and supply gluts have troubled producers for years, forcing them to cut output in recent months.
The situation this year looks even more challenging. Glass futures on the Zhengzhou Commodity Exchange have plunged nearly 20% in the past month, a period when demand usually picks up. The reasons include China's teetering property market and weaker-than-expected vehicle output in April. China has a vast requirement for natural gas, carried by sea from mega-projects in far-flung places like Qatar and Australia, or over pipelines that stretch across continental Asia.
Dalian futures fell last week to their lowest since February 2021, after a near-5% drop in home appliance sales in the first quarter, according to the National Appliance Information Center. The problems are slower growth in personal incomes and a"low-frequency sales cycle" for white goods, according to Wu Haitao, a director at the center.Corn starch has a wide variety of uses, in soft drinks, as a thickening agent for sauces and in the paper and textiles industries.
Although retail sales have outperformed other economic measurements in the months since China's Covid Zero restrictions were lifted, they grew at a slower pace than expected in April. China's falling population is another headwind: corn starch is a key ingredient in baby formula.Shanghai pulp futures went into free-fall in February after a sudden recovery in production at paper mills after the Lunar New Year holiday was augmented by resurgent imports.
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