Now we know why commodity prices rallied so strongly in the closing months of 2016 – China was an aggressive, consistent buyer of products of all types – especially those favoured by Australia such as iron ore, coal, copper, oil and gas.
December in fact saw China end the year continuing to spend heavily on imports of key commodities, boosting the amounts for 2016 as a whole to record levels for crude oil, iron ore, copper and soybeans, as well as larger than expected volumes of coal used for heating and in steelmaking.
The data confirms rising demand from China has been the main driver behind the rebound in commodity prices, especially in the second half of last year, as well as the sustained rebound in iron ore prices for most of the year.
Stockpiling ahead of Chinese New Year later this month was cited as one factor in December’s strength in commodity import volumes (the long holidays start later this week and culminate on January 28).
Over the year, China’s imports of crude oil, coal and iron ore surging by 13.6%, 25.2% and 7.5% respectively and for 2016, shipments of oil, iron ore, unwrought copper, copper concentrates and soybeans hit all-time highs, according to China’s General Administration of Customs on Friday.
Coal shipments stood out and were among the highest on record for a month, while iron ore notched up the third biggest volumes for the year in December, and cracked the billion tonnes mark for the first time ever over the year.
The Customs department said imports of iron ore rose 7.5% to a record 1.024 billion tonnes last year, topping the 2015 record of 952.84 million tonnes.
December saw iron ore imports slip to 88.95 million tonnes, down 3.2% from November and 8% from the monthly record of 96.26 million tonnes set in December 2015. But the tonnage in December was still massive and at relatively high prices of up to $US80 a tonne.
Crude oil imports hit 36.38 million tonnes in December, or 8.57 million barrels per day (bpd). This was up 9% from November and well above the previous record of 8.04 million bpd set last September.
For all of 2016, China’s crude imports reached a record high 381 million tonnes, up 13.6% or by 912,000 bpd over 2015, marking the strongest annual growth by volume on record – perhaps the best sign of the strength of the rebound in the Chinese economy.
China’s coal imports eased slightly in December from November but were still up more than 50% from a year ago at 26.84 million tonnes.
For 2016, China’s coal imports surged 25.2% from a year earlier to 255.5 million tonnes, reflecting China’s campaign to reduce overcapacity in the domestic coal sector which created a shortage of coal for steelmaking and power generation.
That rebound was not seen as a year ago as analysts confidently forecast another slide in imports, and falling prices, and more price pressures for iron ore.
Copper imports rose to 490,000 tonnes in December from 380,000 tonnes previously. For the year as a whole copper imports increased by 2.9%, and at 4.95 million tonnes, the highest annual figure on record.
China’s exports of steel products fell 3.9% from the previous month to 7.8 million tonnes in December. Full-year export volumes dropped to 108.46 million tonnes from a record 112.4 million tonnes in 2015.
China’s exports in dollar terms in December fell from a year earlier, following November’s small rise.
Exports fell 6.1% in December from a year earlier, following a 0.1% gain in November, which broke a seven-month streak of declines. But it didn’t last.
Reuters commented that “The figures indicate that China’s overseas shipments, once an important generator of growth, are continuing to weigh on its overall economic performance amid continued sluggishness in global trade."
Imports in December rose 3.1% from a year earlier, compared with a 6.7% gain in November.
China’s trade surplus in December fell to $US40.82 billion from $US44.61 billion the previous month, falling short of a median forecast for a $US48.30 billion surplus.
For 2016, exports dropped 7.7%, while imports declined 5.5%, resulting in a trade surplus of $US510 billion, smaller than the $US594.5 billion surplus in 2015.
It was the second annual fall in exports and the largest year’s drop in eight years.
