As we forecast the widespread Covid lockdowns and high world prices for key commodities hit China’s trade performance in March and will hit much harder in April.
China’s trade surplus fell from the average of January- February (even though it quadrupled from a low reading in March 2021) as imports sagged and growth in exports eased.
In fact imports eased 0.1% to $US228.7 billion in March, missing market forecasts of 8% growth and sharply lower than the 15.5% increase in January and February (China combined both months because of the variable timing of the Lunar New Year).
Volumes of oil iron ore, LNG and copper all fell in March as world prices surged off the back of Russia’s invasion of Ukraine and western sanctions which hit trade in some of these commodities which Russia exports into global markets.
This was the first fall in imports since August 2020, as domestic demand weakened amid tighter measures to control a resurgence of Covid cases – measures that have been further tightened and extended in April.
Export extended their double-digit growth, increasing by 14.7% from a year earlier to $US 276.08 billion, down from the holiday impacted 16.3% rise in January and February (which China combines) and less than half the 30% surge in the same month in 2021 which was compared to a weak March in 2020 when the first wave of the pandemic had stalled the economy.
It jumped to $US47.38 billion in March up sharply from the $US11.83 billion in the same month a year earlier, easily beating market forecasts of US22.4 billion, but that was down almost 60% from the record $US115.9 billion reported in January and February.
The March quarter saw China report a trade surplus of $US163.33 billion.
…………
Data on imports helped explain the slide in the value of imports last month – it was China’s usual tactic of cutting import volumes when prices were high.
China’s crude oil imports fell 14% in March compared with the same month a year ago (when prices were lower), extending a two-month slide.
The official explanation was independent refiners cutting imports because the higher world prices knocked margins and large state-owned refineries underwent maintenance.
China imported 42.71 million tonnes last month, data from the General Administration of Customs showed on Wednesday, 05 10.06 million barrels a day (bpd).
That compares with 11.69 million bpd in March 2021 and an average of 10.53 million bpd over January and February of this year – oil prices rose in March in the wake of Russia’s invasion of Ukraine and tough sanctions that stopped much of Russia’s crude and gas from reaching non-contracted destinations.
Imports in the first quarter totalled 127.85 million tonnes, or 10.4 million bpd, down 8% or roughly 890,000 bpd less than the weaker first quarter of 2021.
China’s natural gas imports were 7.985 million tonnes last month, Customs data showed, the lowest since October of 2020 as world LNG prices more than doubled.
…………
China’s Customs Administration reported that iron ore imports fell 14.5% in March from the same month a year earlier.
China imported 87.28 million tonnes of iron ore, down from 102.11 million in March 2021, the General Administration of Customs said. The 87.28 million tonne figure wasn’t much lower than the 90 million tonne average for January and February of this year (imports for the two months totalled 181 million tonnes).
In the first quarter of 2022, China imported 268.36 million tonnes of iron ore, down 5.2% from 283 million in the January-March period a year ago.
Reuters also claimed Brazilian exports fell sharply, but figures from the country’s Ministry of Industry showed shipments in March this year totalled 28.78 million tonnes, up slightly from 28.4 million tonnes in March, 2021.
So a mystery fall perhaps?
…………
China’s coal imports recovered in March from a two-year low in February, but were still 40% lower than the corresponding period last year, as world prices surged past $US400 a tonne for thermal coal and over $US600 a tonne for steelmaking coking coal.
That saw them turn to cheaper (price controlled) but lower quality domestic supply.
China brought in 16.42 million tonnes of coal last month, according to the General Administration of Customs on Wednesday.
That compares with 11.23 million tonnes in February, which was the lowest level since December 2019, and 27.33 million tonnes in March 2021.
Over the first quarter of 2022, China imported 51.81 million tonnes of coal, down 24.2% on the year.
Coal consumption in 8 coastal provinces fell in the past few weeks as the lockdowns restricted movement and closed factories and businesses, according to Reuters.
…………
High world prices in March (when Comex saw the copper price briefly top $US5 a pound in the first few days of the month) saw China’s copper imports in March down the for third month in a row.
Tonnage fell 8.8% last month from a year ago according to China’s General Administration of Customs on Wednesday.
March 2021 saw copper imports surge 25% from the depressed levels of March 2020 as the first pandemic wave and lockdowns crippled demand for the metal so the comparison with last month was skewed because of the high comparative base.
The country imported 504,009 tonnes of unwrought copper and products last month, down from 552,317 tonnes in March 2021 but above the 459,461 tonnes a month earlier, according to the customs data.
March imports of copper concentrate, or partially processed copper ore, totalled 2.18 million tonnes, according to the customs data. That was a touch higher than the 2.17 million tonnes in March, 2021.
