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(The opinions expressed here are those of the author, a columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, March 9 (Reuters) - China's imports of major commodities remained robust in February, underlining the recent positive trend, but also masking a few areas of emerging concern.
Imports of crude oil, coal, iron ore and copper were all lower in February than in January, but once adjusted to a daily basis, the picture remained one of strength.
Crude oil imports were 31.78 million tonnes in February, equivalent to 8.286 million barrels per day (bpd), up from January's 8.01 million and second only to December's record 8.57 million.
Iron ore imports were 83.49 million tonnes in February, down from January's 92 million, but actually slightly higher on a daily basis at 2.98 million tonnes compared with 2.96 million.
Coal offered a weaker picture, with imports at 17.68 million tonnes in February, down from January's 24.91 million.
On a daily basis, February coal imports were 631,428 tonnes, well below January's 803,548 tonnes.
However, January was exceptionally strong and imports of coal in the first two months of 2017 are up a massive 48.5 percent on the same period last year.
Unwrought copper imports were 340,000 tonnes in February, down from January's 380,000 tonnes, but not vastly different on a daily basis, with February's 12,143 tonnes only just shy of the previous month's 12,258 tonnes.
Overall, the big picture is that China's commodity imports are remaining at robust levels, even if they are not growing strongly.
This is a reasonable conclusion, but scratch a little deeper and there are areas of concern, which by themselves aren't enough to outweigh the current trend, but do highlight some risks.
The strength in crude oil imports is largely being driven by increased demand from smaller, private refiners that were previously prevented by regulations from directly importing crude.
Now that they can buy crude, instead of relying on fuel oil as a feedstock, these refineries are increasing their runs, but also adding to a surplus of refined products in the Chinese market.
This can be seen by the sharp increase in exports of refined fuels, with 4.26 million tonnes being shipped out in February, up 40.1 percent from January's 3.04 million.
On a barrels per day basis, February's performance is even more impressive, as it amounts to around 1.22 million bpd, up 55 percent from about 784,516 bpd in January.
Put in context, February's imports of crude oil were 276,000 bpd more than in January, but the product exports were about 436,000 bpd more.
In other words, the increase in crude oil imports in February was nowhere near enough to compensate for the jump in exports, something that may be sign of softer demand growth in the domestic market or a drawdown of product inventories.
Turning to the steel market, and the main news here was that exports of steel products were 5.75 million tonnes in February, down 22.5 percent from January's 7.42 million tonnes.
For the first two months of 2017, steel product exports are 25.7-percent lower, a trend that if continued for the rest of the year would result in total exports of around 80 million tonnes, well below 2016's 108.5 million.
While a potential drop of close to 30 million tonnes of steel exports is far from a death blow for an industry producing around 800 million tonnes a year, it does highlight that the risks to China's steel production this year appear mainly to the downside.
This means that the risk for iron ore imports is also biased toward weakness, with much depending on whether the domestic mines can restart, or whether costs and anti-pollution measures will keep them idled.
For coal, much of the weakness in February's imports is seasonal as winter heating demand eases, a trend that will likely continue until the summer demand peak.
But just as last year's strong growth in imports was largely a result of Chinese political policy decisions, so too is 2017 shaping up as a year where decisions by the authorities will drive coal imports.
There are two competing factors at work, the first being the desire of the authorities to ensure a stable price and supply from domestic mines, and the second a gathering impetus on the part of Beijing to limit coal use as part of the fight against pollution.
The first factor should be mildly positive for coal imports as keeping supply somewhat constrained and domestic prices relatively high will boost the competitiveness of imports.
The second factor will depend on how quickly the Chinese authorities can get rid of coal-fired systems for heating buildings and powering factories.
Unwrought copper imports are down 15.8 percent in the first two months of 2017 compared to the same period last year, hardly an encouraging sign of manufacturing and construction health in China.
While there have been some supply issues that may have impacted imports, the fact that copper inventories have also been rising in China adds to the concern.
Copper stocks monitored by the Shanghai Futures Exchange CU-STX-SGH have surged by 221 percent to 313,873 tonnes in the week ended March 3 from the recent low of 97,839 tonnes on Nov. 4 last year.
Overall, it appears that there are some cracks in the prevailing market narrative of strong Chinese commodity imports, and while these aren't yet enough to start hoisting red flags, they are certainly worth monitoring.
Editing by Joseph Radford