China April Commodity Imports Fall On High Inventory, Slowing Economy
05/10/2012| 01:05am US/Eastern
-- China's imports of key commodities including copper and iron ore fell on month
-- High inventories, softer economic conditions blunt buyers' appetite
-- Agricultural commodities show greater resilience
(Combines stories, adds analyst comments and past trade data.)
By Chuin-Wei Yap
China's April imports of major commodities fell to their lowest monthly levels in more than half-a-year, as softer macro-economic conditions and high inventory levels dented purchasing appetite.
Import trends in the world's biggest commodity buyer are an indicator of slowing Chinese industrial activity, a key factor in softening global demand.
China's overall imports only rose 0.3% in April from a year earlier, data from the General Administration of Customs showed Thursday. This compares with an increase of 5.3% in March. Economists had expected a rise of 10.0%.
In volume terms, China's copper and copper-alloy imports fell to a seven-month low, down 19% from March to 375,259 metric tons.
The slowdown had been widely expected, with analysts warning for weeks that high copper inventories would blunt order books.
"Chinese buyers have bought so much copper [in previous months] that it has created a shortage in the non-Chinese market," Mirae analysts Henry Liu and Shirley Zhao said. "With a huge inventory, Chinese real demand for copper looks pale."
Copper imports slowed in April because consumption weakened, said Shanghai Cifco analyst Fang Junfeng.
Analysts estimate China has inventories that exceed 2 million tons of copper. As much as 90% of the inventories at bonded warehouses in Shanghai "are used for financial arbitrage" rather than for end-user consumption, Bank of America Merrill Lynch said in a note.
"We expect lower Chinese imports in the second quarter of 2012," said BNP Paribas analyst Stephen Briggs. "Given our view of the wider market outlook, Chinese net [copper] imports may remain below recent levels in the second half of 2012. China may delay any restocking until 2013."
Iron ore imports followed a similar pattern, with April shipments sinking to 57.69 million tons, their lowest level since July 2011.
April volumes were an 8% decrease on March, accelerating a trend begun two months back, when imports fell 3% from February.
China's steel demand has been heavily hit by policy curbs on the construction sector, which accounts for half of steel demand in the country. A weak global economic outlook has not aided steel exports.
"External demand will not increase substantially," Xu Lejiang, chairman of China's bellwether Baosteel Group Corp., said Tuesday.
Spot iron ore import prices rose 6% between mid-February and mid-April, further denting buying appetite.
Still, January-April imports were higher. In the first four months of the year, iron ore imports rose 6.5% on year.
Agricultural imports were slightly more resilient than metals. China's April soybean imports rose 26% from a year earlier and 1% from March.
-By Chuin-Wei Yap, Dow Jones Newswires; 8610 8400 7704; firstname.lastname@example.org.