Chinese imports surprised by being stronger than forecast in June, rising 7.2% instead of the predicted 3.5% and more than reversing the previous month’s decline.
While iron ore and coal remained robust, copper was a concern, and oil was also troubling, with the smallest daily import volume in two years.
This suggests that the property sector is suffering significantly, and perhaps the increasing sales of new energy vehicles are having a more substantial impact on oil consumption than previously understood.
Weak prices and stagnant demand appear to be harming oil and copper demand, while climate conditions are affecting coal demand.
Iron ore and coal imports were impacted by floods, heavy rain, hot weather, and weak demand.
For an industry that has long claimed financial difficulties, China’s iron and steel sector shows no signs of losing its appetite for imported ore.
Chinese customs data revealed that iron ore imports jumped more than 5% in July compared to June.
Imports totaled 102.81 million tonnes last month, according to data from the General Administration of Customs. This compared to 97.61 million tonnes in June and was a 10% increase from the 93.48 million tonnes imported in the same month of 2023.
Chinese analysts attributed the rise to iron ore miners scheduling more shipments to meet their quarterly targets (in July), although separate data indicated that portside stocks at the major 45 points climbed to 150 million tonnes at the end of July (they have since declined slightly).
Prices fell 7% in July as demand weakened, with scorching heat and heavy rains hindering construction activity.
However, China's iron ore imports are still significantly ahead of 2023's figures, with a 6.7% increase to 714 million tonnes in the first seven months of the year.
Prices dipped below the US$100 a tonne level twice on the SGX platform in Singapore during July. Overall, the SGX price declined by 7% last month.
Meanwhile, China’s coal imports unexpectedly reached a seven-month high in July as heatwaves drove up power demand.
China imported 46.21 million tonnes of coal last month, the highest since December's record high of 47.3 million tonnes.
Analysts had anticipated a slowdown in the pace of imports following a surge that lasted until June as domestic production recovered from earlier disruptions.
China experienced several rounds of record-breaking hot days in June and July (which continued into early August in the eastern part of the country). This led to a surge in power demand as consumers increased air conditioning use to stay cool.
From January to July, imports totaled 296 million tonnes, a 13.3% increase from the previous year and reaching a level that, in past years, triggered an unofficial import limit. However, this limit was relaxed last year, resulting in record imports of 474 million tonnes.
Based on the first seven months' total and assuming imports of a low 40 million tonnes per month, China will likely import close to or just over half a billion tonnes by the end of the year.
Tellingly, China’s imports of unwrought copper and copper products declined in July, with analysts blaming the dip on weak demand. This contrasts with the strong demand for iron ore in the steel industry.
The strong demand for coal can be more easily explained by the hot weather boosting electricity demand.
Data from the General Administration of Customs released on Wednesday showed a 2.9% year-on-year decline to 438,000 tonnes. For the first seven months, copper imports were still up 5.4% at 3.2 million tonnes.
China’s crude oil imports were the lowest since September 2022, falling to 42.34 million tonnes in July, or about 9.97 million barrels per day (bpd). This was a nearly 12% decrease from June and 3% below July 2023.
Reuters reported that demand has been weak, with some refiners incurring significant losses. Two plants owned by state-owned Sinochem were shut down indefinitely for maintenance to curb losses.
Faltering demand, particularly for diesel fuel, hurt state refiners' throughput. For the first seven months, crude oil imports totaled 317.8 million tonnes, or 10.89 million bpd, down 2.4% from the same period in 2023. This represents one of the few annual declines and the steepest fall since early 2023.
