PREVIEW-China Dec crude, iron, soy imports seen rising as economy revs up

Tue Jan 8, 2013 6:08am GMT

* Dec customs data due on Thursday, Jan 10

* Iron ore imports to hit new high after buying spree

* Crude deliveries expected to rise on capacity additions

* Copper likely to decline as demand dips, domestic production holds up

* Soybean deliveries up as margins turn positive

By David Stanway

BEIJING, Jan 8 (Reuters) - China's imports of crude oil, iron ore and soybeans are expected to have risen in December as confidence in the economy grew and buyers stocked up for 2013, but copper purchases likely fell as year-end demand dwindled while local output stayed strong.

China, the world's biggest consumer of most commodities, is due to release December trade data on Thursday.

A pick-up in manufacturing activity last month to its strongest since May 2011 added to signs that the world's second biggest economy was recovering after slowing down for seven consecutive quarters, and that has boosted the appetite for a range of commodities.

Crude oil deliveries are likely to inch up as refining capacity rises, while iron ore imports may have risen to a record high as steel mills prepared for a surge in demand and decline in supplies going into the new year.

"We are quite confident about the Chinese economic recovery and we believe demand has improved quite a lot since the third quarter," said Henry Liu, senior analyst with Mirae Asset Securities in Hong Kong.

"China is buying much more iron ore right now but it depends what's available on the market -- everyone has been desperately looking for sources," he said.

Arrivals of delayed soybean cargoes were expected to push imports up by more than 30 percent compared to November. With the fall in Chicago prices, crushing margins have turned positive ahead of the peak demand season before the lunar Chinese New Year which begins in February.

Overall trade is expected to recover slightly in December, with exports likely to rise 4 percent from a year ago, up from 2.9 percent in November, and imports likely to rise 3 percent after remaining flat in the previous month.

CRUDE OIL

December crude imports by the world's second biggest oil consumer are expected to rise slightly from November, with crude throughput rising as a result of new refining capacity coming onstream over the past two months.

November imports reached 5.69 million barrels per day, the joint third highest daily rate on record, and one trader said that figure was likely to rise 2 to 3 percent in December.

Two new crude units with a combined capacity of 240,000 bpd started operation in October, and in early December, Sinopec Corp also started up a 200,000-bpd crude unit at its subsidiary plant in Maoming in southern China.

Energy consultancy CI forecast that crude runs at Chinese refineries were 7.3 percent higher year-on-year in December.

IRON ORE

China, the world's biggest buyer of iron ore, is likely to set a new record high for imports in December, exceeding the previous record of 68.97 million tonnes set in January 2011. November imports, at 65.78 million tonnes, were the second highest on record.

There have already been strong indications of a surge in deliveries over December, with exports from Australia's Port Hedland reaching a record 20.23 million tonnes, up a quarter compared to November.

Supplies sourced from Port Hedland accounted for nearly a quarter of the November total.

Global iron ore prices, currently at around 15-month highs, rose substantially over December, with many Chinese buyers expecting not only an improvement in demand in the new year but also a supply crunch as seasonal bad weather disrupts deliveries from Australia and Brazil.

The benchmark index for 62-percent grade iron ore .IO62-CNI=SI ended the month at $144.90 per tonne, up nearly $30 from the end of November.

COPPER

Copper imports by the world's top consumer of the metal are expected to inch down in December from the previous month as demand for spot metal fell due to plants winding down operations at the end of the year and as domestic production stayed strong.

"Fundamentally, imports in December should not be higher than November given that the price ratios were bad," said analyst Yao Yao at Maike Futures, adding that importers would face losses of more than 2,000 yuan per tonne had they imported spot refined copper cathodes in December.

Arrivals of anode, refined metal, alloy and semi-finished copper products rose 13.5 percent month-on-month to 365,331 tonnes in November, boosted by the arrivals of delayed shipments after a week-long holiday in the previous month.

But traders warned that some importers might have received extra 2012 term shipments in December after they delayed imports due to arrive earlier due to weak domestic demand.

SOYBEANS

The China National Grain and Oils Information Center, a government think tank, estimated that December soy imports would exceed 5.5 million tonnes, up from 4.2 million tonnes in November and slightly higher than the 5.4 million tonnes imported in December 2011.

"Crushers, which were worrying earlier about the drought and supply shortage in the United States, purchased many cargoes in September and October, and many have tried to delay the cargoes to December and January after a subsequent fall in Chicago prices," said an industry analyst at the center.

Rising demand ahead of China's lunar new year holidays has improved crushing margins for soy plants, which turned profitable in December after months of losses, traders said. (Reporting by David Stanway, Niu Shuping and Judy Hua in BEIJING, Polly Yam in HONG KONG; editing by Miral Fahmy)

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