China’s export and import growth slowed noticeably in the January-February period as Covid outbreaks, surging commodity prices and the rise of tensions in Ukraine each took their toll.
And there’s further problems ahead for the world’s biggest commodity importer as global prices for the likes of oil, gas, copper, nickel, wheat, coal, palladium and other metals surge to record highs in the wake of the invasion – which China refuses to acknowledge.
Growth in Chinese exports slowed to 16.3% (still solid) in the first two months of the year from the same period a year earlier, better than the market’s 15.0% guess, but down from the 20.9% rise in December.
Imports were up 15.5%, easing from a 19.5% rise in December when companies usually lift imports ahead of the long Lunar New Year holiday break (as they do every year).
That saw China post a trade surplus of $US115.95 billion for the two months, or around $US58 million for each month compared to an average of $US51.6 billion for each of January and February 2021.
The 2022 monthly average surplus was well down on the $US99.50 billion market forecast surplus and with December’s $US94.46 billion actual surplus.
The customs agency publishes combined January and February trade data to smooth distortions caused by the Lunar New Year, which can fall in either month.
Export extended their double-digit growth for the 16th month in a row while the 15.5% rise in imports across the two months indicates a weakening in demand, or a cut in volumes because of price rises (a traditional Chinese tactic when commodity prices rise sharply).
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China’s imports of key commodities in January and February did not reflect a buoyant domestic economy and demand.
Volumes in the first two months of this year were weak to lower – except for copper. Meat imports fell sharply as did coal, LNG and oil were lower (as prices started rising) and iron ore imports remained steady in the first two months of 2022, but the cost was down on a year ago (unlike for other commodities).
Data from the country’s Customs Administration showed that 181.1 million tonnes of iron ore were imported in January-February, compared with imports of 181.5 million tonnes in the first two months of 2021.
Customs said the value of iron ore imports in the first two months of the year slumped 36.1% on an annual basis as prices were lower than they were at the start of 2021.
The trade data also showed China’s steel products exports fell 18.8% to 8.23 million tonnes in the first two months of the year while steel imports fell nearly 8% to 2.21 million tonnes from a year earlier.
Surprisingly imports of unwrought copper grew 9.6% year on year to 939,000 tonnes and China’s imports of copper ore and concentrates grew by 10.2% on year to 4.18 million tonnes. That rise stood out against the weakness in volumes elsewhere.
Since the end of February, copper prices have hit $US5 a pound for the first time in Asian trading on Monday, oil prices surged to more than $US139 a barrel for Brent, the global marker before a small easing, thermal coal prices are over $US400 a tonne, according to the ICE Newcastle index.
LME nickel soared 20% in Asia on Monday to more than $US34,000 a tonne, an all-time peak. Lead, silver, gold and zinc as well as tin all rose as well.
China’s coal imports in the first two months of 2022 dropped 14% from a year earlier after Indonesia, its biggest overseas supplier of the fuel, banned exports for a period in January, delaying shipments of dozens of ships.
The volatile coal market was watching reports Monday of growing concerns about whether Indonesia would be able to meet production targets this year in the wake of the January ban.
Fears remain that the country might run short of coal for its own power stations if miners chase record prices in world markets.
Chinese coal imports totalled 35.39 million tonnes of coal in January-February, compared to 41.13 million tonnes in the same period in 2021, according to China’s General Administration of Customs data.
Oil imports fell 5% to 84.15 million tonnes over the two months or around 42 million tonnes in each month. That was about 10.53 million barrels a day, down from 11.08 million bpd in the first two months of 2021.
Imports of gas, including LNG totalled 19.86 million tonnes for the two months, down 3.8% from a year earlier but still nearly 10 million tonnes for each month.
Meat imports plunged 33% as production of pork continued to surge thanks to pig herds maturing after being rebuilt from the terrible Swine fever epidemic of a couple of years ago.
