Business & Investment

China’s recovery in major commodity imports in November may not last long: Russell

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Launceston — China’s major commodity imports were clearly strong in November, but strong performance may be due to short-term dynamics that may not last in the long run.

The world’s largest commodity importers had a somewhat volatile year until November 2020, with crude oil, iron ore and copper weakening, while natural gas and coal were resilient.

Customs data for November, released on Tuesday, showed that imports of the entire commodity complex returned to higher imports, reaching highs for the first time in months.

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Crude oil imports were 10.17 million barrels (bpd) per day, down 14.4 million barrels last November, but up 14.3% from 8.9 million barrels in October.

Chinese refiners have returned to purchase crude oil for delivery in November, primarily because the government has granted new import quotas to independent refiners that had to be used by the end of the year. It is due to.

This created a strong demand for Russian crude oil from independent refiners. Not only does this grade meet quality requirements, it also has significant advantages due to its shorter travel times compared to crude oil from the Middle East, Africa and the Americas.

But unless Beijing grants more import licenses in the New Year, this dynamic may prove short-lived.

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The surge in crude oil prices in September and October, when Brent futures hit a three-year high of $ 86.70 a barrel on October 25, could also weaken China’s demand in December and January. Because the price was soaring.

Despite strong November results, crude oil imports in the first 11 months of 2021 were down 7.3% compared to the same period last year. This is where refiners will import fresh crude oil for several months this year.

If crude oil imports were sluggish in most of 2021, the same would not be true for natural gas, with both pipeline and liquefied natural gas (LNG) arrivals increasing by 14.4% from October to November to 1,073. It will be 10,000 tons.

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Natural gas imports have increased by 21.8% in the first 11 months. This reflects strong demand for fuel as China shifts more industrial and residential heating from more polluted coal.

However, coal imports were also strong, rising 30.1% from October to 35.05 million tonnes in November, the strongest month of the year.

Demand for imported coal has been stimulated by China’s inability to keep up with stronger electricity demand, primarily as a result of policies in which some mines are idle for safety checks.

Demand for imported coal could ease, especially when peak winter demand ends around February next year, as China has pushed domestic coal production to near record highs in recent weeks.

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Metal recovery

On the metal side, iron ore imports were sluggish in the second half of 2021 as steel demand slowed amid a general slowdown in the construction and infrastructure sectors.

However, in November, 149.6 million tons were cleared at customs, up 14.6% from October, the highest in 16 months.

This strong performance seems incompatible with the mild steel outlook and may reflect early purchases by traders as iron ore prices plummeted from a record high of $ 235.55 in May to less than $ 100 at the beginning of November. There is sex.

Iron ore imports are likely to ease again in the coming months, unless new stimulus measures by Beijing boost steel demand.

A metal that may be enjoying more sustained import growth is copper, with November arrivals up 24.3% to 510,402 tonnes, the highest since March and up for the third straight month. I am.

Demand for industrial metal has increased after being hit by power shortages prior to forced closures or reductions in some production.

The energy crisis seems to have been largely resolved, and the demand for copper is responding in turn.

Interactive graphics – China’s trade and economic snapshots: http://tmsnrt.rs/2iO9Q6a

(Edited by Robert Birsel)

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China’s recovery in major commodity imports in November may not last long: Russell

https://financialpost.com/pmn/business-pmn/november-rebound-in-chinas-key-commodity-imports-may-not-last-russell China’s recovery in major commodity imports in November may not last long: Russell

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