(Adds analyst comments, details, background)
By Fayen Wong
SHANGHAI, June 8 China's imports of major
commodities fell in May from the previous month, official
customs data showed on Sunday, as companies scaled back on
orders after robust shipments in the previous months caused a
Falling product prices on the back of sluggish demand have
led loss-making companies, especially steel mills and crushers,
to reduce orders, while increased scrutiny on commodities
financing and tighter credit also weighed on import demand.
Daily crude imports fell 9.4 percent from the record high in
April, while soybean arrivals dropped 8.2 percent from the
preceding month, which was the highest this year.
Iron ore, coal and copper also fell, with the latter two
commodities also hit by higher overseas prices.
"Stricter bank requirements for trade loans have dented
import orders to some degree. High stocks and a poor import
arbitrage also kept buyers away," said Lian Zheng, a base metals
analyst at Xinhu Futures.
Headline trade data showed overall exports gained steam in
May on the back of a global economic recovery, but an unexpected
1.6 percent fall in total imports, versus a 0.8 percent rise in
April, could signal weaker domestic demand.
The government is due to release industrial output, retail
sales and fixed-asset investment on Friday.
China, the world's largest energy consumer, imported 26.08
million tonnes, or 6.14 million barrels per day (bpd) of crude
oil in May, bringing total shipments in the first five months of
this year to 128.7 million tonnes.
On a daily basis, crude imports of 6.14 million barrels per
day (bpd) was 9.4 percent lower than the record high in April,
as refineries cut production during the peak maintenance season.
PetroChina shut its largest 410,000-bpd Dalian refinery for
maintenance from April 10 to late May, industry sources said.
China's slackening economy, set to grow at its slowest pace
in 23 years, has caused its oil demand to drop to a seven month
low in April as refineries scaled back production for
maintenance and continued to export surplus fuel.
However, analysts said imports should remain at elevated
levels on the back of stockpiling in commercial storages or
Copper imports from the world's top consumer fell 15.6
percent from a month ago to 380,000 tonnes in May. The figure
includes anode, refined, alloy and semi-finished copper
High spot copper prices on the London Metal Exchange had
prompted some end-users to delay buying spot metal in May, a
purchasing manager at a large copper end-user said, while other
traders said some firms were also unable to secure letters of
credit for imports after banks stepped up lending requirements.
Going forward, imports could fall in the coming months as an
investigation into possible fraud in metal financing in the port
of Qingdao has led some major banks to suspend new metal
financing to some Chinese customers.
The ongoing probe by authorities, which is to check against
allegations that a company used single cargoes of metal multiple
times to obtain financing, has rattled banks and trading houses.
IRON ORE, COAL, SOY
Iron ore imports stood at 77.38 million tonnes in May, down
7.2 percent from the previous month. Total imports in the first
five months of 2014 was up 19 percent from year ago at 382.7
Confronted by swollen inventories that are hovering near
record of over 100 million tonnes and falling rebar prices
that have lost 17 percent this year, mills and traders
in China have slowed down fresh purchases of the raw material,
causing iron ore prices to drop.
Traders said import credit tightening by Chinese banks and
the rapid fall in iron ore prices in May forced many smaller
iron ore traders to halt buying.
"People are waiting for prices to stabilise before they
re-enter the market. But I think import demand in the near term
is going to be affected by crackdown on commodity financing
deals," said an iron ore trader.
In a sign that slower domestic demand was pushing Chinese
steel makers to push for more sales abroad, customs data showed
steel products exports rose 7 percent in May from month ago to
8.07 million tonnes, while arrivals fell 6.2 percent.
Imports of coal, including lignite, dropped 11.4 percent in
May from the preceding month to 24.01 million tonnes, as falling
domestic prices made overseas supplies less attractive. Rising
hydropower generation, along with sluggish economic growth, also
led utilities to reduce orders.
Soybean imports to China, the world's largest buyer, stood
at 5.97 million tonnes in May, down 8.2 percent from 6.50
million tonnes in April.
Analysts said shipments could fall again in June, as a surge
in imports since December has resulted in a severe supply glut
and was hurting soy plants' crushing margins.
"Crushing margins are likely to maintain negative for a
relative long period as soy oil prices are pretty weak. We
expect margins not to improve much in June," said Li Lifeng, an
analyst with an industry portal (www.cofeed.com).
Persistently high overseas soy bean prices had prompted some
Chinese traders to default on April and May-delivery shipments,
causing top seller Marubeni to divert some shipments to other
(Additional reporting by Ruby Lian, Polly Yam, Judy Hua and Niu
Shuping; Editing by Michael Perry)