By Clyde Russell
LAUNCESTON, Australia- A warning shot has been fired across the bow of proponents of the view that commodities are entering a new super-cycle: China’s imports of crude oil, iron ore, copper and coal in the first two month of the year look far from bullish.
China is the world’s largest importer of all these major commodities. It’s also dominant in the two – iron ore and copper – that are perhaps the most important for backers of the theory that efforts to decarbonize the global economy mean the dawning of a new era of rising prices.
On the face of it, China’s imports of major commodities in January and February appear to show some growth, especially in year-on-year terms. But breaking them down reveals signs that the appetite of the world’s second-largest economy for natural resources may be waning slightly.
Iron ore imports in the first two months were 181.5 million tons, up a reasonable 2.8 percent from the same period last year, according to official customs data released on March 7.
China customs doesn’t provide separate figures for January and February, combining the two months in a move that may serve to smoothe out the data given the variable timing of the Lunar New Year holidays during the period.
Iron ore’s modest year-on-year gains start to look less impressive when compared to the preceding months.
If converted to daily imports, the January-February period saw arrivals of 3.08 million tons per day. That’s down from 3.12 million and 3.27 million in December and November respectively.
In fact, the performance at the start of 2021 was the weakest on a daily basis since May last year – when China was still restarting its economy after the lockdowns imposed to combat the spread of the novel coronavirus.
It’s a similar story for copper. The first two months of 2021 saw imports unwrought copper of 884,009 tons, up 4.65 percent from the same period in 2020.
But on a tons per day basis, the January-February imports are 14,980 tons, down from 16,530 tons in December and 18,710 tons in November.
Coal is a commodity that tends to be volatile around the turn of the calendar year as the market tries to adjust to unofficial restrictions China applies to import volumes.
But even allowing for this dynamic, coal imports in the first two months of the year were 41.13 million tons, down 39.5 percent from 67.94 million in the same period in 2020.
Converting to daily imports gives a reading of 697,000 tons per day in the first two months of 2021, down from 1.26 million in December though above November’s 389,000. – Reuters