BEIJING Feb 10 China's red-hot commodities
buying continued at a near record pace last month, defying the
seasonal holiday slowdown, as utilities, steel mills and oil
refiners sought foreign coal, iron ore and crude to replenish
lower domestic supplies.
Iron ore shipments rose 12 percent to the second-highest on
record as seaborne supply continued to displace higher-cost
production at home, stoking a rally in futures prices
to fresh three-year highs.
Coal arrivals were the highest for January in three years,
and crude imports were the third highest on record, as declining
domestic production boosted the need to buy more from abroad.
"Steel mills are making really good money. So that means
they can afford to pay for more iron ore," said Lachlan Shaw,
UBS analyst in Melbourne.
Beijing's vow last month to shut low-grade steel producers
which use scrap metal by the end of June should help boost
further demand for iron ore.
"A lot of this has ... replaced the marginal producers in
China," said Helen Lau, analyst at Argonaut Securities in Hong
Kong. "We will not be surprised if this continues into
China, the world's top soy buyer, imported 7.66 million
tonnes of soybeans in January, the highest for the month since
at least 2010, as delayed shipments arrived during the month and
crushing demand remained strong.
Copper was the exception, with a drop both on the month and
from a year ago.
Trends in January and February can be distorted by the long
Lunar New Year holidays, with business slowing down weeks ahead
of time and many firms scaling back operations or closing. The
holiday began in late January this year and early February last
Still, the world's largest trading nation reported
better-than-expected import and export data, even as Asia's
exporters brace for a rise in U.S. protectionism.
The headline numbers also reinforced optimism about the
health of the world's top commodities market that has fueled
prolonged rallies in iron ore and coal prices.
Some analysts questioned if underlying demand was robust
enough to sustain shipments over the coming months.
"We believe this is driven by storage with excess crudes
going into storage," said Sushant Gupta, Research Director of
refining and chemicals with Wood Mackenzie.
Iron ore stocks at China's ports hit a record high last week
SH-TOT-IRONINV, suggesting mills may not be scooping up all
the raw material that's arriving.
As peak heating season passes, coal demand from utilities
may ebb. A sharp jump year-on-year reflected the sustained
pick-up in buying of lower priced foreign coal over the past
year after the government cracked down on domestic mining.
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(Reporting by Beijing, Sydney and Melbourne commodities team;
Writing by Josephine Mason; Editing by Richard Pullin)