Official Chinese figures at the weekend showed that imports held up – sort of in January and February, but because of the government’s decision to combine both months (which they have done before in past years), it is hard to work out the real performance.
Imports dipped 4% overall, the Chinese Customs Administration said on Saturday – a good performance against the 17% slump in exports for both months.
Iron ore imports give a hint – they managed to rise 1.5% for the two months to 176.8 million tonnes compared to the 174.3 million tonne total for the same two months of 2019 (which were reported separately).
In 2019, Chinese iron ore imports topped 93 million tonnes in January and 81 million in February. Imports in December totalled more than 101 million tonnes which was one of the highest monthly totals on record.
Some of that was drag forward tonnage because of the late January start to the Lunar New year.
But analysis of ship movements into Chinese iron ore receiving ports, showed a sharp fall in February that could not be accounted for by the impact of the late Lunar New Year in January.
Analysts say the 1.5% rise would have been accounted for by the level of imports in January.
The fall in Brazilian exports in January and February and the impact of Cyclone Damien on Rio Tinto’s mine in the Pilbara saw around 10 million tonnes of ore off the market in both months, which helped account for the firmness of prices.
Reuters said that iron ore inventories at ports in China hit a three-month high of 131.1 million tonnes on February 7 but have fallen back again with the resumption of transport links.
Exports from Brazil continue to be weaker than expected and with the estimated 6 million tonne shortfall from Rio this year, it’s no wonder iron ore prices rebounded last week by 8% to $US90.19 a tonne for 62% Fe fines delivered to northern China.
That was after a 9% slide the week before on fears about the coronavirus’s impact on demand.
And there were two other signs of the damage the virus has done to Chinese business activity.
Saturday’s customs data also showed China exported 7.8 million tonnes of steel products in the first two months, down 27% from the first two months of 2019. That’s much larger than the overall 17% slide in exports.
And Reuters pointed out that exports of unwrought aluminium – including primary metal, alloy and semi-finished products – slumped 25.3% year-on-year to 669,208 tonnes in the first two months of this year.
In both cases all that would have happened in February, with only a small amount being associated with the early timing of the New Year break in late January.
Other commodity import totals were also confused by the combining of the two months.
China’s crude oil imports over the first two months of 2020 rose 5.2% from a year earlier, as refiners built up inventories of feedstock ahead of the Lunar New Year holiday.
Imports of crude oil totalled 86.09 million tonnes in January and February, equivalent to 10.47 million barrels per day (BPD)., according to Reuters’ calculations.
That was up from 81.83 million tonnes, or 10.12 million BPD, in the same period for last year but down from 10.7 million BPD in December.
Natural gas imports also rose – up 2.8% year on year to 17.8 million tonnes.
Imports of unwrought copper rose 7.2% year-on-year in the first two months of 2020 to 846,107 tonnes from 789,358 tonnes in the first two months of 2019. The previous period had one less day due to 2020 being a leap year.
December imports had been 527,000 tonnes, the highest monthly total since March 2016. That would indicate a fall of perhaps 20% in import volumes.
As a result of the weaker demand, copper inventories in Shanghai Futures Exchange-registered bonded warehouses hit a four-year high last week.
A 1.2% fall in imports of copper concentrates over the two months also hints at a big fall in demand because Chinese processors have been looking for more and more concentrates in the past year to 18 months and cutting back shipments of unwrought metal.
The 1.2% year-on-year to 3.77 million tonnes in January and February combined, illustrates the fall in demand from smelters’ for raw material as they faced lower demand and cut production levels in reaction.
Soybean imports jumped 14.2% in the first two months of 2020 as US exports stepped up following the trade war truce at the end of 2019 cleared customs.
