Even as the latest rise in China’s inflation rate took the headlines in the data dump for November last weekend, the really stunning bit of news was the surge in imports of commodities by Chinese companies (and the government?).
Imports of key commodities including copper, crude oil, iron ore and soybeans surged strongly in the month, according to data on Friday by China’s General Administration of Customs.
The figures were much larger than expected and helped send imports higher and narrowed the trade surplus (which might have been one reason for the sharp rise).
Imports rose 37.7% to $130.4 billion, up from October’s 25.3%.
The extra cost of these higher levels of commodity imports could be over $US5 billion, according to some estimates.
Iron ore imports jumped by 25.5% to 57.4 million tonnes, from the 45 million tonnes imported in October.
Imports from January to November totalled 560.6 million tonnes, down 0.9% from last year.
Those 12 million extra tonnes would have seen BHP Billiton and Rio Tinto grab 4 to 5 million extra tonnes of sales given their existing market shares and supply capabilities.
At market prices that could be an extra $US800 million in revenue for the month between the two giants.
There was a 47% jump in soybean imports (almost certainly to flood the local market with oil, meal and other products to try and put a lid on rampaging food prices and inflation).
Bean imports hit 5.48 million tonnes in November and like iron ore, were up from an unusually low level in October.
China’s imports of copper surged 28.5% to 351,597 tonnes in November from 273,511 tonnes in the previous month.
Total imports in the first eleven months this year rose 0.7% to 3.95 million tonnes.
China also imported 400,000 tonnes of scrap copper last month.
Imports of crude oil jumped to an impressive 5.09 million barrels a day, the fourth-highest monthly figure ever, up 22.1% from October’s 19-month low of 3.86 million barrels a day.
In November, oil imports jumped 21.5% to a total of 20.91 million tonnes from October and up 12% from November 2009.
Net imports of oil products were the highest in more than a year too as the government ordered state-owned refiners to stop exports of diesel and step up imports to try and relieve shortages and help curb a growing (and expensive ) black market in the fuel.
The surge in iron ore imports wasn’t related to a jump in steel production, with 50.17 million tonnes produced in November, the lowest this year.
That was down marginally from the 50.3 million tonnes produced in October but up 4.8% from November 2009.
In the 11 months to November, Chinese steel production totalled 577.25 million tonnes, up 10.1% on the same period of 2009.
Steel production for 2010 looks like coming out around 528 million tonnes.
Commodity analysts said there were a couple of possible explanations for the very sharp rise.
Rebuilding stockpiles was the first, especially ahead of the Chinese winter and the holidays in January-February.
If that’s the case, there will be a big rise in December’s imports, as there was a year ago.
The other is that the fight against inflation with higher imports for soybeans and for oil and oil products (with iron ore and copper stockpiling).
A combination of both is the most logical explanation given the 5.1% surge in inflation in the year to November.
