By Clyde Russell
LAUNCESTON- China’s imports of major commodities are starting to show a divergence between robust energy and somewhat softer industrial metals, which may show some of the impact of the ongoing trade dispute with the United States.
Crude oil imports rose 11.5 percent in October from a year earlier to a record high of 10.72 million barrels per day (bpd), according to customs data released on Nov. 8.
The undimmed appetite of the world’s largest crude importer is partially a reflection of the start-up of new refineries, demand from smaller, independent plants as well as increased exports of refined fuels.
It’s also likely that crude imports are being boosted by the ongoing buildup of both commercial and strategic storages.
Crude imports for the first 10 months of the year were 9.06 million bpd, up 820,000 bpd from the 8.24 million bpd from the same period last year.
This means that China is accounting for more than 80 percent of the expected global growth in crude oil demand this year, given the latest International Energy Agency estimate was for world demand growth of just 1 million bpd.
Imports of natural gas via pipelines and as liquefied natural gas (LNG) dropped to 6.52 million tons in October, down 20.6 percent from September and 10.6 percent from October last year.
However, imports are still up 7.9 percent in the first 10 months of the year and the October drop was most likely a result of the closure of the Rudong import terminal since late September.
The terminal, one of the three largest in China, can import 6.5 million tons of LNG a year and it is expected to return to full operations during November.
The third leg of China’s energy imports, coal, also fell in October from September, with 25.69 million tons arriving last month, down 15.2 percent from September’s 30.29 million.
However, October’s imports were 11.3 percent higher than the same month last year and the first 10 months of year has seen 276.24 million tons imported, up 9.6 percent from the same period last year.
This shows imports are already just shy of the 2018 total of 281.2 million tons, meaning Beijing’s informal target of limiting annual imports in 2019 to the same level as the prior year won’t be met.
There is a possibility that customs clearances will be tightened in November and December, limiting coal imports, but even if this is the case, it’s worth noting that any decline will be as a result of policy, not of any softening in demand.
In contrast to the strength of energy imports, China’s appetite for industrial metals is more restrained, but not as weak as might be suggested by slowing exports and softening economic growth amid the trade dispute with Washington.
Imports of unwrought copper fell 3.1 percent to 431,000 tons in October from September, but were up 1.9 percent from a year earlier.
Imports of copper ores and concentrates rose 21.1 percent in October to 1.91 million tons from September’s 1.58 million, and were also up 22 percent from the same month in 2018.
Overall, on an implied copper basis, ANZ Banking Group analysts said imports were 5 percent weaker in October from September, but up 4.4 percent in the first 10 months of the year. – Reuters