LONDON (Reuters) - China’s imports of refined base metals have been running at a robust pace this year, with flows of copper, zinc and nickel up on a year ago and the country on track to be a net importer of lead for a second year running.
Six months after the China’s customs department stopped publishing detailed monthly reports via companies such as Reuters, some light has returned to what is happening with the world’s largest metals buyer.
It has done so in the form of a new customs department website with a searchable database for this year's trade flows. (220.127.116.11/)
It’s in Chinese only and decidedly user-unfriendly, but it’s the real thing, cross-checking accurately with the first-quarter figures released under the old distribution system.
Analysts at Refinitiv have reconstructed the country’s headline trade in the six months of statistical darkness that followed the suspension of the old service.
The picture that emerges is one of robust import appetite for refined metal but significant changes in flows of raw materials.
Refined copper imports rose by 20 percent to 3.1 million tonnes in the first 10 months of this year.
Although there has been a steady monthly flow of exports over the course of 2018, the pace has dropped 15 percent on 2017 levels, meaning that net imports are up by 24 percent at 2.9 million tonnes.
Imports of concentrates have climbed by 19 percent to 16.6 million tonnes (bulk weight), a record for the first 10 months of the year.
A combination of increased supply and smelter outages in India, the Philippines and Europe has allowed Chinese concentrate buyers to step up purchases from the international market.
Scrap imports, on the other hand, have slumped by 36 percent, reflecting China’s crackdown on imports of lower-quality material and the retaliatory duties the country slapped on U.S. scrap in August.
However, the million-tonne drop in scrap imports has been largely mitigated by a sharp rise in the copper content of the scrap.
Refinitiv analysts use an implied content calculation to determine that, in terms of contained metal, this year’s imports are down only 6 percent on last year.
Imports of primary aluminium were 21,000 tonnes in October, the highest monthly total since January 2017.
However, cumulative imports over the first 10 months of this year fell by 33 percent to 69,000 tonnes, still only a drop in the aluminium ocean and dwarfed by the flow of semi-manufactured aluminium products out of China.
October’s spike may reflect temporary tightness in ingot availability in the east of the country as shipments of aluminium from smelters in the northwest are displaced by high-priority coal freight ahead of the Chinese winter.
The real stand-out in the aluminium figures has been China’s flip from net importer to net exporter of intermediate material alumina.
October’s exports of 460,000 tonnes bring the year-to-date total to almost 1 million tonnes.
China has never exported such quantities of alumina in the past and the turnaround speaks volumes about how tight the market outside China has become after the enforced curtailment of Hydro’ s Fluorite refinery in Brazil.
Imports of aluminium scrap, by contrast, are steadily falling in response to the same drivers as those affecting copper - namely higher purity requirements and duties on U.S. scrap flows.
Headline imports have dropped 27 percent to 1.3 million tonnes, with both September and October imports falling below the 100,000-tonne level for the first time since February 2016.
ZINC AND LEAD
Imports of refined zinc hit a year’s high of 80,600 tonnes in October, the highest monthly figure this year.
Cumulative imports have risen 13 percent from last year’s record flows to 508,000 tonnes.
Mined concentrates imports have also been running at a healthy clip, up 19 percent to 2.4 million tonnes bulk weight.
The root cause of both higher raw material and metal imports is the strain on domestic concentrates availability as a host of smaller operators have been forced out of the market by Beijing’s environmental crackdown.
Even with compensatory offset from increased imports, China’s smelters have been struggling to cope with margin compression, resulting in five consecutive months of falling domestic refined zinc production, official figures show.
China’s net imports of refined lead have bucked the broader trend, falling 35 percent year on year to 47,000 tonnes for January-October.
However, until last year the country was a net exporter of lead in this form and the flip to net importer status is set to continue for a second year.
Drilling a little deeper into the figures shows imports are booming again after a five-month lull in the January-May period, when China was again a net exporter.
October’s tally of 20,000 tonnes was the highest monthly import total since May 2009.
It’s worth noting that, unlike zinc, lead raw material imports have also been declining. Inflows of concentrates dropped 8 percent for January-October, extending a three-year slide.
A shortage of raw materials, both of mined concentrate and scrap, has hit domestic refined lead production, explaining the stepped-up imports of metal.
Refined net nickel imports in the first 10 months of this year increased by 14 percent to 177,000 tonnes.
The real story, however, is what has been happening in intermediate and raw material flows.
Imports of ores and concentrates have risen by 37 percent to 40.2 million tonnes, almost back to the levels before Indonesia banned exports of unprocessed nickel ore in 2014.
Indonesia has since relaxed its ban and the resumed flow of ore in such quantities suggests that China’s nickel pig iron (NIP) sector is also in robust good health.
The flip side of Indonesia’s changing nickel landscape has been a sharp drop in China’s imports of Indonesian NIP as more material is diverted into a growing domestic processing sector, led by Chinese stainless giant Tsingshan.
The opinions expressed here are those of the author, a columnist for Reuters.
Editing by David Goodman