COLUMN-China’s weak commodity imports set to improve, but risks abound (Russell)

Band Clyde Russel

LAUNCESTON, Australia, July 14 (Reuters)Chinese imports of most major commodities were shockingly weak in June, but the weak performance is more a lesson in history than an indicator of future demand from the world’s biggest buyer of natural resources.

Crude oil imports fell to a nearly four-year low in June, at 8.72 million barrels per day (bpd), down 19% from May and 11% below the June level of last year, according to data released Wednesday General Administration of Customs.

For the first half of the year, crude imports are down 3.1%, while exports of refined fuels are down 40.7% from the first six months of 2021.

Imports of natural gas by pipeline and in the form of liquefied natural gas (LNG) fell 3.9% in June compared to May and 14.6% compared to the previous month, to fall by 10% in the first half 2022.

Coal imports amounted to 18.98 million tonnes, down 7.6% from May and 33.2% from June 2021, with arrivals for the first half down 17.5% below the level of the same period last year.

Iron ore imports amounted to 88.97 million tonnes, down 3.84% from the previous month and 0.5% from June last year, leaving arrivals since the beginning of the year 4.4% below those of the first half of 2021.

Only copper looks somewhat positive with June imports of raw copper at 537,698 tonnes, up 15.5% from May and 25.5% from June 2021, with first half imports in 5.3% increase.

It may be tempting to view copper as China’s commodity import indicator, with gains to come as the economy reopens from earlier COVID-19 lockdowns, as the index shows. purchasing managers which returned to positive territory from 50.2 in June against 49.6 in May.

But it’s also worth noting that copper imports may have been boosted by the opening of the arbitrage window with the London Metal Exchange, meaning traders could sell at a higher price in Shanghai, encouraging as well as imports.

Another factor is that while China’s economy appears to be recovering, despite being threatened by further COVID-19 related lockdowns, the rest of the world is grappling with runaway inflation, energy insecurity and political tight monetary policy.

The situation in which the world’s second largest economy finds itself is now very different from that of the Western world and much of the developing world, which is feeling the pain caused by the Russian invasion of Ukraine and its subsequent disruption of flows world of raw materials.


The question for markets is whether China can indeed go it alone, stimulating its economy with infrastructure-focused stimulus spending and hoping that domestic consumers can offset some of the slowdown likely due to lower prices. exports of manufactured goods to the rest of the world.

Crude imports are certainly likely to pick up in the coming months, especially if no widespread lockdown is imposed, given new quotas granted to independent refiners, as well as new export allowances for refined fuels.

High prices have reduced imports of energy products and may continue to do so, with LNG and coal expected to remain at high levels amid war-induced fuel shortages in Ukraine.

LNG imports have been constrained by high spot prices, with incoming cargoes mostly purchased under long-term contracts.

Coal imports have also been limited due to strong domestic production and increased hydroelectricity generation, which have reduced the need for imported fuel to generate electricity.

Iron ore is also likely at an inflection point, with the market waiting to see if stimulus spending actually materializes and translates into a significant increase in demand for steel.

Overall, China is at a very different stage of its economic cycle compared to much of the rest of the world, and its commodity imports in the coming months may begin to reflect this contrast.

INTERACTIVE CHART – Overview of China’s trade and economy:

(Editing by Sam Holmes)

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