China's imports of crude oil, copper and iron ore fell for a second month in June as factors including unfavourable prices, economic uncertainties and tighter credit weighed on sentiment, but overall demand remained healthy.
Arrivals of soybean and coal ticked up from month ago, although fresh orders of both have slowed to a trickle and imports are expected to fall from July onwards, traders said. [TRADE/CN]
Despite a slowing economy, China's import demand for commodities has generally confounded expectations of a decline.
For the first half, crude imports were up 10 percent on a year ago, copper imports up 26 percent and iron ore up 19 percent.
The resilience has been partly driven by Beijing's pledge to boost infrastructure investment, such as the rebuilding of shanty towns and rail construction, to stabilise growth. Demand for financing, where companies use imports as a way to access cheap loans, has also boosted orders.
Looking ahead, traders and analysts said demand for copper imports appeared the most fragile due to an ongoing probe into a alleged metal financing fraud that has prompted banks to cut back on credit to private Chinese traders.
"Financing activity is the key variable going forward," Citi Research analyst Ivan Szpakowski said in a report. "The trend of metals financing activity shifting to locations outside of China has accelerated over the past month as financing in Chinese bonded warehouses has become more difficult."
Other economic data showed China's trade performance improved in June but still missed market forecasts, reinforcing expectations that Beijing will have to unveil more stimulus measures to stabilise the economy and meet its 2014 growth target. [ID:nL4N0PJ1YD]
CRUDE OIL
Crude oil imports in June fell for a second month, dipping 7.8 percent to 5.66 million barrels per day, but remained up 5.1 percent on a year earlier. [ID:nL4N0PK2UB]
Analysts said the decline in imports was most likely driven by a spike in international crude prices, while accidents and refinery maintenance also contributed.
With most refineries back online, Citi Research said a decline in crude prices in recent weeks is likely to see imports rebound in July.
In the six months, China's crude imports rose to 151.7 million tonnes, up 10.2 percent from a year earlier and more than double the rate in 2013.
"Since crude runs only grew 2.3 percent in the first five months, such high crude imports could only suggest stockpiling, including from the state petroleum reserves," said a Beijing-based senior oil trader.
China imported 2.36 million tonnes of oil products in June and exported 2.25 million tonnes, leaving net oil product imports at 110,000 tonnes, customs data showed.
COPPER
Copper imports fell 7.9 percent in June from a month earlier to 350,000 tonnes, the lowest level since April 2013, as Chinese banks reduced lending for metals imports following a probe into an alleged metals fraud at Qingdao port. [ID:nL4N0PK2VU]
The drop in June shipments was expected. Traders said trading of copper stocks in China's bonded zones came to a virtual halt and banks froze lending for metals imports when news of the alleged fraud came to light in early June.
"Even now, banks are very cautious in giving letters of credit for copper imports," said Zhou Jie, trading manager at China International Futures (Shanghai) Co Ltd, who expects imports to stay weak in July.
In the first half of 2014, imports rose 25.9 percent year-on-year to 2.52 million tonnes, the data showed.
IRON ORE
China's iron ore imports fell for a second month by 3.6 percent to 74.57 million tonnes, as a sharp drop in prices encouraged buyers in the world's top consumer of the steelmaking raw material to hold off on orders. [ID:nL4N0PK2UB]
Spot iron ore prices <.IO62-CNI=SI> slumped 13 percent in May, the biggest monthly fall in a year, and raised expectations of even lower prices. The drop in bookings has been mainly reflected in June's shipment.
Total imports for the first half of the year reached a record 460 million tonnes, up 19.1 percent year-on-year.
"Quite a lot of companies were burnt by the drop in prices and have stopped fresh imports. I think July shipments may recover because of bargain-hunting by steel mills and other big trading houses," said a Qingdao-based iron ore trader.
China's biggest steel mills raised output to record levels in the middle of June, according to CISA data, despite concerns that output growth was continuing to outstrip demand. [STEE/CN]
CISA estimated that 97.2 percent of additional crude steel production in the first five months of 2014 was absorbed by the overseas market.
SOYBEANS
Chinese imports of soybeans rose 7.0 percent in June from May as Chinese crushers keep robust imports from South America, despite negative crushing margins.
China, the world's top soy buyer imported 6.39 million tonnes of the oilseed in June, up from 5.97 million tonnes in May, but down 7.8 percent from 6.93 million tonnes a year ago, according to customs data issued on Thursday.
Imports may start to slow in July, with arrivals seen at 5.8 million tonnes, according to estimate by the official China National Grain and Oils Information Centre. (CNGOIC).
Chinese crushers have been making losses since the second quarter of the year due to a surge in imports and a slowdown in demand growth after outbreaks of bird flu earlier in the year.
"Imports from July onwards are expected to fall every month, partly because supplies from South America are decreasing," said Li Lifeng, an analyst with an industry portal .
Source: Reuters
Arrivals of soybean and coal ticked up from month ago, although fresh orders of both have slowed to a trickle and imports are expected to fall from July onwards, traders said. [TRADE/CN]
Despite a slowing economy, China's import demand for commodities has generally confounded expectations of a decline.
For the first half, crude imports were up 10 percent on a year ago, copper imports up 26 percent and iron ore up 19 percent.
The resilience has been partly driven by Beijing's pledge to boost infrastructure investment, such as the rebuilding of shanty towns and rail construction, to stabilise growth. Demand for financing, where companies use imports as a way to access cheap loans, has also boosted orders.
Looking ahead, traders and analysts said demand for copper imports appeared the most fragile due to an ongoing probe into a alleged metal financing fraud that has prompted banks to cut back on credit to private Chinese traders.
"Financing activity is the key variable going forward," Citi Research analyst Ivan Szpakowski said in a report. "The trend of metals financing activity shifting to locations outside of China has accelerated over the past month as financing in Chinese bonded warehouses has become more difficult."
Other economic data showed China's trade performance improved in June but still missed market forecasts, reinforcing expectations that Beijing will have to unveil more stimulus measures to stabilise the economy and meet its 2014 growth target. [ID:nL4N0PJ1YD]
CRUDE OIL
Crude oil imports in June fell for a second month, dipping 7.8 percent to 5.66 million barrels per day, but remained up 5.1 percent on a year earlier. [ID:nL4N0PK2UB]
Analysts said the decline in imports was most likely driven by a spike in international crude prices
With most refineries back online, Citi Research said a decline in crude prices in recent weeks is likely to see imports rebound in July.
In the six months, China's crude imports rose to 151.7 million tonnes, up 10.2 percent from a year earlier and more than double the rate in 2013.
"Since crude runs only grew 2.3 percent in the first five months, such high crude imports could only suggest stockpiling, including from the state petroleum reserves," said a Beijing-based senior oil trader.
China imported 2.36 million tonnes of oil products in June and exported 2.25 million tonnes, leaving net oil product imports at 110,000 tonnes, customs data showed.
COPPER
Copper imports fell 7.9 percent in June from a month earlier to 350,000 tonnes, the lowest level since April 2013, as Chinese banks reduced lending for metals imports following a probe into an alleged metals fraud at Qingdao port. [ID:nL4N0PK2VU]
The drop in June shipments was expected. Traders said trading of copper stocks in China's bonded zones came to a virtual halt and banks froze lending for metals imports when news of the alleged fraud came to light in early June.
"Even now, banks are very cautious in giving letters of credit for copper imports," said Zhou Jie, trading manager at China International Futures (Shanghai) Co Ltd, who expects imports to stay weak in July.
In the first half of 2014, imports rose 25.9 percent year-on-year to 2.52 million tonnes, the data showed.
IRON ORE
China's iron ore imports fell for a second month by 3.6 percent to 74.57 million tonnes, as a sharp drop in prices encouraged buyers in the world's top consumer of the steelmaking raw material to hold off on orders. [ID:nL4N0PK2UB]
Spot iron ore prices <.IO62-CNI=SI> slumped 13 percent in May, the biggest monthly fall in a year, and raised expectations of even lower prices. The drop in bookings has been mainly reflected in June's shipment.
Total imports for the first half of the year reached a record 460 million tonnes, up 19.1 percent year-on-year.
"Quite a lot of companies were burnt by the drop in prices and have stopped fresh imports. I think July shipments may recover because of bargain-hunting by steel mills and other big trading houses," said a Qingdao-based iron ore trader.
China's biggest steel mills raised output to record levels in the middle of June, according to CISA data, despite concerns that output growth was continuing to outstrip demand. [STEE/CN]
CISA estimated that 97.2 percent of additional crude steel production in the first five months of 2014 was absorbed by the overseas market.
SOYBEANS
Chinese imports of soybeans rose 7.0 percent in June from May as Chinese crushers keep robust imports from South America, despite negative crushing margins.
China, the world's top soy buyer imported 6.39 million tonnes of the oilseed in June, up from 5.97 million tonnes in May, but down 7.8 percent from 6.93 million tonnes a year ago, according to customs data issued on Thursday.
Imports may start to slow in July, with arrivals seen at 5.8 million tonnes, according to estimate by the official China National Grain and Oils Information Centre. (CNGOIC).
Chinese crushers have been making losses since the second quarter of the year due to a surge in imports and a slowdown in demand growth after outbreaks of bird flu earlier in the year.
"Imports from July onwards are expected to fall every month, partly because supplies from South America are decreasing," said Li Lifeng, an analyst with an industry portal .
