Chinese imports not fazed by US
• Year ends with a bang, with natural gas and crude oil still in high demand, which may signal Beijing is adjusting to the tariff dispute
China’s imports of major commodities ended 2019 with a bang, with strong gains showing that the appetite of the world’s largest importer of natural resources remains robust despite the trade dispute with the US.
China’s imports of major commodities ended in 2019 with a bang, with strong gains showing the appetite of the world’s largest importer of natural resources remains robust despite the trade dispute with the US.
The exception was coal, but December’s paltry imports of the polluting fuel were the result of cargoes not being cleared by customs in response to Beijing’s wishes to put a cap on purchases from overseas.
Once again, the standout was crude oil, with December imports coming in at 10.78-million barrels per day (bpd), down slightly from November’s record 11.13-million bpd.
The total for the year was up 9.5% from 2018 and it was the 17th straight year that annual imports have set a record high.
The increase in crude imports has been largely driven by the start-up of two huge new refineries, with a combined capacity of 800,000 bpd, meaning that much of the increase last year was structural in nature.
However, it is also worth noting that storage flows into commercial and strategic stockpiles were probably about 900,000 bpd, a strong figure that may not be repeated in 2020, especially if the strategic inventories are close to full.
A further factor was the increase in exports of refined products, which gained 14% to 66.85-million tons in 2019 from 2018, according to customs data. Using the BP conversion factor of eight barrels of product per tonne, Chinese refiners exported about 1.46-million bpd of fuels such as petrol, diesel and jet paraffin in 2019.
Hot on the heels of crude as a top import performer came natural gas, with both pipeline and liquefied natural gas (LNG) arrivals totalling 9.45-million tons in December, the thirdhighest on record.
For 2019, natural gas imports rose 6.9% to 95.56-million tons, down from the 31.9% growth rate recorded in 2018. The marked slowing in natural gas imports growth is deceiving as it was improbable that China could continue to increase its imports at the breakneck pace of recent years.
It is possible that 2019 becomes the new normal for China’s natural gas imports, with 2020 likely to show reasonable growth, boosted largely by the ramp-up of supplies from a new pipeline from Russia, as well as increased LNG regasification capacity.
Rounding off the energy complex is coal, and the very weak 2.77-million tonnes of imports in December can safely be ignored.
The low figure, about a 10th of the usual monthly total, is the result of cargoes not being cleared by customs in December in a bid to hold down 2019 imports to levels around the same as those in 2018.
COPPER AND IRON
Despite the effort, total imports for 2019 were 299.67-million tons, a smidgen below 300million tons and 6.6% higher than the 281.23-million tonnes in 2018.
It is likely that coal imports will start 2020 strongly, as the December-arriving cargoes are cleared, and also as utilities and traders boost imports after winter weather disrupted the transport of domestic coal.
Turning to metals, imports of copper ended 2019 on a high, with 527,000 tons of unwrought copper arriving in December, the highest monthly total since March 2016 and up 9.1% from November.
Overall, imports of unwrought copper for 2019 were 4.98-million tons in 2019, down 6% from 2018’s record 5.3-million tons.
But it is worth noting that imports were stronger in the second half than the first, suggesting the Chinese economy was adjusting to the blow from US trade tariffs and that the government’s stimulus measures were starting to bear fruit.
Another factor is the changing nature of China’s copper imports, with ores and concentrates playing a more vital role as domestic smelting capacity increases.
Imports of copper ores and concentrates rose 11.6% to 21.99million tonnes in 2019 from 2018, the customs data showed.
Iron ore also had a strong conclusion to 2019, with December imports at 101.3million tons, the highest in 27 months and up 11.7% from November. For the year as a whole, iron ore imports were 1.069-billion tons, up 0.5% from 2018 and not far off the record 1.075-billion tons in 2017.
That annual growth rate may look modest, but it is worth noting that imports in the first half were constrained by the loss of volumes from top exporters Australia and Brazil, after weather disruptions in Australia and a dam collapse in Brazil.
Putting together China’s imports of major commodities shows that while 2019 as a whole was strong, the second half was better than the first.
This is perhaps an indication that the impact of the tariff dispute with the US is fading amid economic adjustments and official stimulus efforts.
Even keel: A cargo ship at a port in Qingdao in China’s eastern Shandong province on January 14 2020. Commodity imports were stronger in the second half of 2019 than the first, suggesting the Chinese economy is adjusting to US tariffs and the government’s stimulus measures are starting to take effect. /