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PREVIEW-China March commodity imports to rebound; demand uncertain
April 9, 2013 / 4:22 AM / 5 years ago

PREVIEW-China March commodity imports to rebound; demand uncertain

* March trade data due on Wednesday, April 10

* Increases expected after February distortions

* Demand still uncertain in key commodities

BEIJING, April 9 (Reuters) - China’s major commodity imports in March are expected to have recovered slightly following sharp declines in the previous month, but shaky demand and high inventories makes a return to the earlier highs of December and January unlikely.

China will release preliminary March trade data on Wednesday, with shipments of crude oil, iron ore, copper and soybeans all likely to have gained relative to February, when shipments were disrupted by a week-long holiday.

“Starting from the low February base and with more days in March, there are going to be higher import figures in March, but there is still uncertainty about demand,” said a Shanghai-based iron ore trader.

February imports of crude, iron ore, refined copper and soybeans all dropped sharply as economic activity slowed for the Lunar New Year, but the slower pace wasn’t entirely due to the holiday. Imports of the four major commodities saw year-on-year declines over the first two months as a whole, sparking worries about demand growth from the world’s second largest economy.

China’s annual rate of economic growth likely nudged higher in the first quarter of 2013 versus the last quarter of 2012, with fixed asset investment and factory output growth in double digits cementing a mild rebound, according to a Reuters poll.

China’s annual consumer inflation also eased to 2.1 percent in March from February’s 3.2 percent, data showed on Tuesday, leaving policymakers room to keep monetary conditions easy and nurture a nascent recovery.

Traders are still wondering whether China will grow fast enough in 2013 to sustain big increases in commodity imports, especially since supply bottle necks have eased and stocks are plentiful.

According to another Reuters poll, China’s overall import growth in March is likely to have returned to positive territory, while export growth is expected to have eased.


Many traders predict an increase in imports in March, while others have not ruled out the possibility of a further decline. Some state-owned refineries are starting maintenance programmes, and with crude runs at small and independent “teapot” refineries also falling as a result of poor margins, that combination may be enough to pull down oil imports.

“The trend now is to reduce crude imports and raise fuel exports,” said an oil analyst with an investment bank.

Daily crude oil imports from the world’s second-largest oil consumer dropped 9 percent year on year to 5.42 million barrels per day in February, largely because of the Lunar New Year holiday. Crude deliveries over the first two months of the year also fell 2.4 percent, with refiners discouraged by high prices.


March imports are expected to rise compared with the 56.43 million tonnes delivered in February, the lowest in more than a year. Steel mills are continuing to maintain relatively high output and supply disruptions caused by bad weather in Australia have eased.

The tepid recovery in China’s steel demand after the Lunar New Year break, as well as falling steel prices continue to weigh on the market. Many steel mills are eyeing the iron ore stocks piling up at ports instead of seeking forward cargoes.


Arrivals of copper also should have increased in March with importers scheduling more shipments on the expectation that factories will have resumed production following the Lunar New Year break, traders said.

“Imports in March should be higher. We had more shipments in March,” a trader at an international trading firm said.

Arrivals of anode, refined copper, alloy and semi-finished copper products dived 15.1 percent on the month in February to 298,102 tonnes, a 20-month low, as factories shut for the holiday.

Still, Shanghai Futures Exchange inventories are near their highest in a decade and Shanghai’s bonded warehouse stocks are not far off record levels, and that may discourage import growth.


China’s soy imports in March were expected to reach 4 million to 4.3 million tonnes, according to estimates by traders as well as the commerce ministry, up more than a third from the 2.9 million tonnes delivered in February.

However, estimates have already been revised down because of port congestion in Brazil, the world’s second largest exporter.

The congestion will also lead to huge arrivals of soybeans in May and June, with traders expecting around 6.5 million tonnes to be delivered each month. Chinese crushers normally process 5 million tonnes a month. (Reporting by Judy Hua and Niu Shuping in BEIJING, Ruby Lian in SHANGHAI, Polly Yam in HONG KONG, Writing by David Stanway; Editing by Tom Hogue)

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