China’s commodity import volumes not as impressive as dollar value: Russell
(Views expressed here are those of the author, columnist for Reuters.)
LAUNCESTON, Australia — China’s exports and imports posted a robust performance in May, both rising more than expected and raising hopes that the world’s second-largest economy is emerging from its self-imposed zero-COVID hibernation.
But it is important, especially when assessing the strength of imports, to distinguish between value and volumes.
The dollar value of imports in May rose 4.1% from a year earlier, beating expectations for a 2.0% rise and marking the first increase in three months.
China’s largest imports are natural resources, and while May arrivals of major commodities showed some improvement for the most part, performance was much more subdued in terms of volume compared to the upside. dollar value.
Crude oil imports amounted to 46.1 million tonnes, or about 10.86 million barrels per day (bpd), according to calculations based on customs data for the first five months of 2022.
May imports were only slightly higher than April’s 10.47 million bpd and crude arrivals for the first five months of the year are down 1.7% from the same period in 2021 .
It should be noted that May crude imports would have been the first month to start showing the impact of Russia’s February 24 invasion of Ukraine, which sent crude prices to an all-time high in 14 years and saw Brent futures hit nearly $140 a barrel on March 7.
High crude prices have likely deterred Chinese refiners from restocking, although the world’s largest crude importer is likely to increase purchases in the coming months, in part because the economy reopens after a series of COVID-19 shutdowns in several cities and in part because Russian crude is being sold at deep discounts.
As for other energy commodities, the results for coal and natural gas were weak in May.
Coal imports amounted to 20.55 million tonnes, up from 23.55 million in April and in line with 21.04 million in May last year.
Imports in the first five months amounted to 95.96 million tonnes, down 13.6% compared to the same period in 2021, reflecting stronger domestic production and the impact of high maritime prices which curb the appetite for imported fuel.
Imports of natural gas via the two pipelines and in the form of liquefied natural gas (LNG) amounted to 9.04 million tonnes in May, up from 8.09 million in April but down from 10.32 million in May 2021.
For the first five months of 2022, natural gas imports were 9.3% below the level of the same period a year earlier.
For signs of strength in major commodity imports, it was best to look to metals, with iron ore imports at 92.62m tonnes in May, down from 86.06m in April and 89.79m in April. May of last year.
It was the strongest month for the raw material steel since January, although imports were still down 5.1% in the first five months of the year.
The world’s biggest buyer of iron ore is expected to continue to increase purchases as part of efforts to stimulate the economy by increasing spending on infrastructure, construction and manufacturing.
The same dynamic was at work with imports of raw copper, which were around 460,000 tonnes in May, slightly below 470,000 in April, but above 450,000 in May 2021.
For January-May, raw copper imports rose 1.6%, and while not a stellar performance, it is the only major commodity that is in positive territory so far this year.
Overall, May’s imports of major commodities by volume give hope that the worst is over for the Chinese economy and that an acceleration is possible in the coming months.
But much will depend on Beijing’s success in maintaining its zero-COVID policy without widespread lockdowns, as well as hope that exports will hold up despite the global economy struggling with high energy prices and rising inflation.
(Editing by Kim Coghill)