Ore Is Forgiven as Chinese Imports Rebound

By Glenn Dyer | More Articles by Glenn Dyer

In somewhat of a shock, China’s iron ore imports rose in August for the first time in five months, a 10.1% rise over July but down nearly 3% from the same month in 2020.

Imports totalled 97.49 million tonnes last month, August trade data from China’s General Administration of Customs showed on Tuesday.

That compared with 88.51 million tonnes imported in July and 100.36 million tonnes in August last year.

In the first eight months of the year, China imported 746 million tonnes of iron ore, down 1.7% from the same period a year ago, according the data.

That’s the first year on year fall for a year and confirms the impact of the slowdown ordered by the Chinese government in second half steel production.

Chinese steel industry sources say the rise in August’s imports saw portside stocks reach 131 million tonnes, up from 129 million tonnes in mid-July.

The customs data also showed that China’s steel exports fell 10.9% from a month earlier to 5.05 million tonnes in August.

That’s a tangible sign of the impact of the August 1 move to cut exports via higher taxes to help ensure domestic steel supply,

China raised export tariffs for pig iron and ferrochrome, and cancelled export tax rebates for some steel products.

China’s steel imports stood at 1.06 million tonnes last month, increasing slightly from 1.05 million tonnes in July, according to the customs.

As yet there has been no sign of any surge in steel product imports despite tariff cuts on a wide range of products from crude steel to rolled coil.

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Meanwhile the Customs data showed that China’s daily crude oil imports rose 8% in August from July, as refiners resumed purchases following the issue of new import quotas.

China lifted imports to 44.53 million tonnes of oil last month, equivalent to 10.49 million barrels per day (bpd).

That compares with 9.71 million bpd in July, but was still lower than 11.18 million bpd in August 2020.

Crude imports for the first eight months of 2021 reached 346.36 million tonnes, about 10.4 million bpd, down 5.7% from the same period last year (that’s when imported surged after prices collapsed in the June quarter and Chinese buyers went bargain hunting).

Reuters says the data shows that China’s demand for crude oil is recovering after nearly five months of slower purchases, caused by a shortage of import quotas, with buyers increasing the pace of purchases and paying higher premiums to secure supplies.

Customs data on Tuesday also showed China’s refined oil product exports in August at 3.73 million tonnes, down from 4.64 million tonnes in July, hitting the lowest level since July 2020. Could that be a signal that the government is looking to retain as much oil and product in the domestic economy and import more, as it wants to do in steel?

August’s natural gas imports, both piped and liquefied natural gas (LNG), were 10.44 million tonnes, up 11.5% year-on-year. That saw imports for the January-August period jump to 79.31 million tonnes from just over 65 million tonnes.

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China’s coal imports rose 35.8% in August from a year ago as buyers rushed to fill the shortfall from Australia left by the Communist Party government’s ban on imports from Australia.

That has left a growing hole in China’s energy supply and problems in Mongolia with Covid, shipping in Canada and the US and bad weather and Covid in Indonesia has only heightened the problem.

China imported 28.05 million tonnes of coal last month, down from 30.18 million tonnes in July but well above 20.66 million tonnes in August last year, data from the General Administration of Customs showed on Tuesday.

Over the first eight months, China imported a total of 197.69 million tonnes of coal, down 10.3% from the same period in 2020.

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China’s copper imports fell for a 5th month in a row in August, the customs data showed.

Imports of unwrought copper and products into China totalled 394,017 tonnes last month, down 7% from July and down 41% from August 2020

The data showed Chinese copper imports have declined in every month since October last year, except for March, after strong imports in the middle 2020 when China’s economy rebounded strongly from the coronavirus pandemic.

Imports of copper concentrate, or partially processed copper ore, totalled 1.89 million tonnes in August. That was the highest level since May, leaping 19% year-on-year and up 0.2% from 1.887 million tonnes in July.

Commentary in Chinese industry media say the reason for the continuing low levels of copper imports is the still high world prices for the metal of more than $US9,000 a tonne (LME) or more than $US4.20 a pound (Comex)

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Exports of unwrought aluminium and products were 490,286 tonnes in August, the highest since March 2020 with a 24% year-on-year jump and up 4.5% from July.

That’s despite close to 3 million tonnes of metal production being idled in August because of carbon emission reduction reasons and because of power shortages (resulting from coal shortages).

 

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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