LAUNCESTON, Australia (Reuters) - China’s imports of major commodities, including crude oil, iron ore, liquefied natural gas (LNG) and coal, appeared to have once again shown resilience in September, challenging the prevailing narrative that the world’s second-largest economy is weakening.
While official customs data for the month will only be published next week after the national day holidays, vessel-tracking and port data compiled by Refinitiv suggest that imports held up in September.
The steady commodity imports sit somewhat at odds with soft readings in other economic data, with the both the official and private Purchasing Managers’ Indexes painting a picture of a sluggish manufacturing sector.
The official PMI stayed in negative territory in September, improving slightly to 49.8 points from 49.5 in August, while the private Caixin survey rose to 51.4 from 50.4, staying above the 50-level that separates expansion from contraction.
The PMI readings did little to convince markets that a recovery was underway in China, with the breakdown showing domestic demand was where there were signs of strength, but export orders remained weak in the face of the ongoing trade dispute with the United States.
But imports of major commodities have yet to feel a chill wind from the softer economic numbers in China.
Seaborne imports of crude oil in September were estimated by Refinitiv at 8.1 million barrels per day (bpd), down slightly from 8.3 million bpd in August, but up from the 7.85 million bpd in September last year.
There is also the possibility that the Refinitiv numbers will be adjusted higher depending on whether vessels that were discharging their cargoes managed to complete the offloading by the end of the month.
For LNG, China imported 4.46 million tonnes in September, down from 5.02 million in August, but about the same as volumes in May, June and July.
The September arrivals also exceeded the 4.02 million tonnes from the same month in 2018.
Seaborne iron ore imports were 86.1 million tonnes in September, down from 88.4 million in August, but at 2.87 million tonnes per day, September’s daily imports were above August’s 2.85 million.
Taken together, August and September have been the two strongest months for iron ore imports since March, a sign that China is now able to source sufficient supply following outages in top exporters Australia and Brazil earlier this year.
The only major commodity not showing strength was coal, with September seaborne arrivals totalling 22.2 million tonnes, down from 26.5 million in August.
However, the September imports were still well above the 16.8 million tonnes recorded in the same month last year,
Coal may be a special circumstance as its known that the authorities wish to restrict 2019 coal imports to the level in 2018.
Total coal imports, including both seaborne and overland, rose 8.1% in the first eight months of the year to 220.28 million tonnes, according to official customs data.
This leaves just 60 million tonnes available for the September to December period, if 2019 imports are to be kept to the 281.2 million tonnes total for 2018.
It would appear that September coal imports are well above the 15 million tonnes a month average needed for the final four months if the target of no increase is to be met.
This implies coal imports may pull back further in the final quarter of the year, but this should probably not be taken as a sign of economic weakness, rather it should be viewed as a policy imperative unrelated to supply and demand fundamentals.
But so far imports of the other major commodity imports have yet to mirror signs of slower growth in the Chinese economy.
The opinions expressed here are those of the author, a columnist for Reuters.
Editing by Christian Schmollinger