On the face of it, China’s trade figures for February were terrible – but don’t believe the hype because it wasn’t as bad as first thought.
Exports fell 20.7% from the same month in 2018, – the biggest drop in three years and imports were a bit weaker than expected at a fall of 5.2%.
China’s February trade surplus fell to just $US4.12 billion, from the $39.16 billion surplus in January and missing the $US24.45 billion forecast from analysts and economists.
For the first two months, China’s exports and imports fell 4.6% and 3.1%, respectively, leading to a trade surplus of $US43.7 billion.
Exports to the US fell 35% in February as the tensions from the Trump trade war hit home. Most exporters had lifted exports in December and January ahead of the supposed March 1 deadline for the tariff lift that has now been postponed.
Exports also dipped to South Korea, parts of the EU, but rose to Australia.
This year the holiday fell early in February, pulling import demand forward into January, and thereby yielding weaker February numbers. New Year in 2018 was mid-month, allowing for a build-up of imports and exports in the first two weeks, and impacting the March 2018 figures as well.
Export and import figures for this month (released in a month’s time) should give us a far better idea of what is happening.
Stripping out the Lunar New Year effects, China’s customs agency said February’s exports and imports rose 1.5% and 6.5%, respectively, from a year earlier, which was not the story most eager western media and analysts conveyed over the weekend.
Their messages were of doom and gloom, and while not exactly buoyant a story for export, the performance of key imports was solid.
While crude oil imports dipped in February from January because of the holiday, they still averaged 10.12 million barrels per day (bpd), the third-highest on a daily basis and above January’s 10.03 million bpd. Imports totaled 39.23 million tonnes in February, down from 42.6 million in January.
For the first two months of the year, crude imports were 12% higher than for the same period last year at 81.8 million tonnes, or 10.12 million bpd.
With milder weather in February across much of the country, China’s natural gas imports in February fell from January but were up on a year ago.
Total imports of both LNG and pipeline gas were 7.57 million tonnes last month, down from 9.81 million tonnes in January, but up 9.2% from a year earlier, the customs data showed.
Copper imports fell in February but across the first two months, were solid. Imports in unwrought copper last month totalled 352,000 tonnes, down 20% from January’s 440,000, but the two-month total was higher than the first two months of 2018.
And it was a similar story for imports of copper ore and concentrate – February saw a drop of 10.4% from January, but across the first two months rose 12.7% from the same period in 2018 – and that was with a 10% rise in world metal prices in the same period.
With iron ore imports February saw a lowish 84.27 million tonnes imported, down from 91.26 million tonnes in January for a total for the first two months of 174.7 million tonnes compared with 184 million tonnes a year earlier.
Chinese steel mills cut their imports in February to take pressure of world prices in the face of the rolling impact from the Vale mine disaster that will take between 30 and 70 million tonnes of exports off the market for varying periods of time.
For coal, imports were down in February to only 17.6 million tonnes, down from 33.50 million tonnes in January, as the holiday and restrictions on the pace of imports from Australia. But the first two months of the year they totaled 51.1 million tonnes down from the same period last year.
