More confusion from the Chinese economy with a small fall in exports in May (which was better than a bigger decline forecast by the market) more than offset by a huge slide in imports.
China’s exports fell 2.5% in May from a year earlier in US dollar terms, after a drop of 6.4% in April, according to the country’s Customs Administration.
The May figure was better than the median forecast of a 5.0% fall forecast by the market, but what was not forecast was the 17.6% slump in imports from the same month in 2014. That compares to the 11% drop forecast by the market.
Imports of major commodities such as coal fell, along with copper and other metals, oil and iron ore. But data last week showed Australian iron ore exports to China rising in May and so far this year (prices rose 20% in April and May). The sharp fall in coal exports though is not good news.
The news, especially of the sharp fall in imports, helped boost the volatile Chinese sharemarket. After opening weaker, the Shanghai market sparked higher and ended up 2.17%. Investors think the weak imports figure signals the certainty of more stimulus from the central government.
Later today we get May inflation data, then on Thursday there’s industrial production, retail sales, property and urban investment data.
The sharper than expected fall in the value of imports can be explained by lower volumes (eg, for iron ore, copper and oil) and the sharply lower prices compared to a year ago for all commodities. But there is also signs of weak domestic demand continuing as intense price deflation grips the country’s huge manufacturing base.
In yuan terms, China’s exports fell 2.8% in May from a year earlier, after a drop of 6.2% in April. Imports in May were down 18.1% from a year earlier, compared with a 16.1% slide in April.
As a result, China’s trade surplus for May widened to $US59.49 billion from $US34.1 billion in April, and is getting close again to the record $US60 billion plus figures reported earlier in the year.
That pushed the trade surplus for the first five months of the year to a huge $US217.26 billion, double what it was a year ago.
China posts near-record trade surplus in May
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While exports to the US grew nearly 8% in may, exports to the Association of Southeast Asian Nations were flat, down 7% to the EU and off 8% to Japan.
For Australia, the main interest in the Chinese figures was imports of commodities such as iron ore. On the face of it, the figures were weak as iron ore shipments to the country fell from April and from May, 2014.
China’s customs administration said there was a 12% fall in iron ore imports in may to 70.87 million tonnes. That was also 8.4% down from the amount imported in May, 2014. It the lowest monthly total since February.
So bad news? Not quite. As we reported late last week, data from Port Hedland showed that in the first five months of this year, iron ore exports hit 182.4 million tonnes, 13% more than a year ago, with shipments to China up 18% to 153.5 million tonne.
May’s record topped the previous high, set in October. Exports to China were the highest this year. In fact exports in May rose 5.2% from April to top 31.69 million tonnes. In other words, Australian shipments rose while total imports fell, meaning Australian exports took a higher share of the Chinese market.
Over the first five months, iron ore purchases were about 378 million tonnes, down 1.1%, from the same period in 2014. World iron ore prices eased a fraction to around $US64.45 a tonne overnight.
China’s imports of copper fell 16.3% from April to 360,000 tonnes in May.
China’s oil imports fell sharply in May as global prices rose strongly for much of the month. Imports fell 23% in may from April and were down 11% from May last year. But the country still imported a huge 23.4 million tonnes.
China’s coal imports slumped 41% May from May 2014, to 14.25 million tonnes and were down 28% from April. Total imports in the first five months of the year fell 38% to 83.26 million tonnes, compared with the previous year. No wonder world coal prices, especially for thermal coal, are down 20% and more so far this year.
