China’s imports of commodities surged unexpectedly last month putting the world’s second-largest economy on track to set records for shipments of iron ore, coal and soybeans even as concerns linger about slowing economic growth.
For some markets, like soybeans, the robust buying was in line with seasonal expectations as livestock farmers scooped up feed for their animals ahead of peak demand for pork and other meat during the nation’s week-long Spring festival.
In iron ore, the surge to one of the highest on record was partly due to the arrival of shipments delayed by the week-long Golden Week festival at the end of October.
Still, the buying was surprisingly strong even as steel mills and copper fabricators prepared to slow output for weaker demand from the construction sector during the winter months.
“The rise in copper imports reflected in part a rise in Shanghai Futures Exchange inventories and stronger demand from the Chinese power and construction sectors,” said Vivek Dhar, commodities analyst with Commonweealth Bank of Australia in Melbourne.
The buying helped spur a 6.7 percent rise in China’s total imports, easily eclipsing economists’ expectations for a drop of 1.3 percent and its biggest gain since September 2014.
Independent oil refiners with newly granted quotas bought more foreign crude even as oil prices rebounded ahead of expected output cuts by major producing nations, while utilities ramped up their coal purchases as government-enforced mine closures continued to hurt domestic supplies.With the major consumers locked into long-term contracts at big discounts to the cash price and local miners increasing output, the months-long buying may ebb in December, traders said.
In fact, the buying spree across commodities may not continue into December as consumers destock ahead of the holiday at the end of January and the weak yuan makes imports less attractive.
“The debate dividing the market is whether this growth can be sustained into next year, or will things flatten out,” said Dhar.
Still China’s major markets including soybeans, coal and iron ore, were on pace for record-setting shipments for the full year.
Imports of the steelmaking raw material reached 935 million tonnes in January-November, putting it on track to top 1 billion tonnes this year and surpass the record 952.84 million tonnes in 2015.