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China's Commodity Demand Returns In November

Good news for Australia and Australian exporters as China’s demand for commodities picked up sharply in November, surprising foreign analysts as the world’s largest consumer of raw materials lifted imports of copper, crude oil, soybeans and iron ore.

This stronger-than-expected import data could help provide steady commodity prices, which have weakened last couple of weeks. Copper in particular has been hit hard, falling around 7% over the past two weeks to $US6,500 a tonne.

“The rise [in imports] backs up our view that a tightening copper-concentrate market is pushing many buyers into the refined market to satisfy its copper units,” analysts at ANZ said in a note on Friday.

They added that a sharp rise in China’s oil imports in November should also allay concerns about weak demand after October’s fall.

Iron ore imports hit 94.5 million tonnes in November, up 18.9% from October and 2.8% from November, 2016. Iron ore imports for the first 11 months of the tear are up 5.9%, much higher than first forecast at 991 million tonnes. (1.024 billion tonnes of iron ore were imported in 2016, up 7.5%).

Analysts say the performance should also dispel concerns that the closure of steel mills is materially impacting demand.

In fact the trade data shows that higher quality ore from exporters such as Australia and Brazil is being keenly sought by Chinese mills wanting to cut their energy consumption and pollution.

Coal imports grew marginally, rising from 22.05 million tonnes from 21.28 million tonnes and for the first 11 months of the year they are up 8.5% at 248 million tonnes (against the record 255.5 million in 2016).

Imports of copper hit 470,000 tonnes, up 42% from October, and the highest since December 2016. The sharp rise closed the shortfall on 2016 imports to just five per cent at 4.24 million tonnes. That surge in imports helps explain November’s run up in copper prices.

But analysts say the 2017 total is set to fall short of the record 4.94 million tonnes of imports in 2016 after weak demand in the first six months of the year.

Imports of crude oil hit 9.04 million barrels per day (bpd) – the second ever highest recorded level, while China’s natural gas imports in November rose to a record. They hit 6.55 million tonnes, topping the previous record of 6.1 million tonnes last December, data from the General Administration of Customs showed.

In the 11 months to November gas imports hit 60.7 million tonnes and on track to hit a record. They are up 26.7% year to date.

Soyabeans imports were 8.68 million tonnes in November versus 5.86 million in October. Most of those imports come from the US, Brazil and Argentina.

View More Articles By 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.

At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.



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