China’s Commodity Consumption Robust Amid Trade Gloom

By Glenn Dyer | More Articles by Glenn Dyer

The Lunar New Year holiday has had its usual distorting impact on Chinese trade data, especially commodity imports in January.

Iron ore imports picked up, while LNG imports surged, hitting an all-time high last month.

Chinese exports last month rose 9.1% from a year ago, according to figures from China’s General Customers Administration yesterday afternoon. Analysts had forecast a 3.2% fall for exports last month after they were down a surprising 4.4% in December.

Imports fell 1.5% which was far better than forecasts for a 10% drop and the 7.6% slide in December which was the largest monthly fall since July 2016.

That gave China a trade surplus of $US39.16 billion for the January, easily beating the market forecast of $US33.5 billion but well short of the December trade surplus of $US57.06 billion.

Iron ore imports rose 5.3% in January from December to 91.26 million tonnes, from 86.65 million tonnes in December.

But that was still well under (around 9%) of the 100.3 million tonnes in January last year, China’s General Administration of Customs reported on Thursday.

January’s imports were at the highest level since September, thanks to higher profit margins and to maintain the normal 20 day level of stocks through the week-long Lunar New Year holiday that started February 4.

Ore imports will be lower because mills cut production levels until downstream users return to work later this week after the holiday.

A complicating factor though will be the impact of the January 25 Brazilian Vale mine disaster which has boosted prices because upwards of 70 million tonnes of iron ore imports from that country could be taken out of the market. The impact of the fall in exports won’t appear until well into March (it takes around 40 days for Brazilian ore to be shipped to China via the Vale blending operation in Malaysia).

Chinese steel exports in January hit their highest since last June at 6.19 million, up from 5.56 million tonnes in December.

Meanwhile, Chinese oil imports again topped 10 million barrels a day in January for the third month in a row. 10.03 million tonnes was lower than the record of 10.43 million in December. Oil imports totaled 42.6 million tonnes last month.

Natural gas imports (LNG or via pipeline) rose to a monthly record of 9.81 million tonnes, exceeding the previous peak in December of 9.23 million tonnes thanks to higher demand from urban heating systems. Warmer winter weather will probably see imports fall this month and into March.

Surprisingly, for all the talk of restrictions on coal imports – especially from Australia, January saw China’s coal imports jump 19.5% from a year earlier to 33.5 million tonnes.

In fact, January’s coal imports were the highest in five years, rising 228% from the weak 10.23 million tonnes reported for December when import restrictions were in place.

China imported 480,000 tonnes of unwrought copper in January, up 14% from 420,000 tonnes in December and 9% from 440,000 tonnes in January 2018. It was the highest level of imports since September 2018 as was the number of iron ore imports).

Imports of soybeans fell 13% to 7.38 million tonnes from January 2018 but up 29% from December’s 5.72 million tonnes.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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