China’s commodities imports slow in July, likely to decline further in months ahead

Last month, commodities imports in China decelerated. Even if the rate was slightly below year-ago levels, major commodities’ imports, such as those of oil and copper, were below the peak levels reached earlier in 2016, said Barclays in a research note. Moreover, the nation’s refined oil products’ exports continued to rise sharply, reaching an all-time high.

The deceleration in imports was seen in iron ore and certain significant agricultural import markets such as soybeans. This implies that supportive factors of government stockpiling and the “mini” stimulus introduced earlier in 2016 might be diminishing now. If this is true, then there is likelihood of additional drops in the coming months, stated Barclays.

Last month, China’s crude net imports came in at 7.29mb/d, a 2.1 percent decline from June. This is the fourth straight month-on-month decline. This led to 1.2 percent decline on year-on-year basis. As several teapot refineries are on maintenance and certain have already filled their import quotas, demand from those refineries has decelerated.

Meanwhile, refined oil products’ net exports reached 643kb/d in July, 20.5 percent up on a sequential basis. This was the highest monthly net export figure on record, stated Barclays. Lower imports and higher exports together contributed to the net export record. The approval of export licenses to smaller refineries stimulated the sharp rise in products exports.

Semi-fabricated copper and unwrought copper imports continue to decelerate sharply and reached 360kt in July, 14.3 percent down month-on-month basis. Continued strength in copper ores and concentrates partially countered this weakness. Copper ore imports rose 42.8 percent year-on-year in July. In the meantime, iron ore imports rose 8.3 percent on sequential basis, reaching 88.4Mt in July.