(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, March 9 China's imports
of major commodities remained robust in February, underlining
the recent positive trend, but also masking a few areas of
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
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
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
CRUDE IMPORTS OUTDONE BY PRODUCT EXPORTS
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
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
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
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.
COAL, COPPER CONCERNS
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
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
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)