In Freight News 09/03/2015
China’s commodity trade slowed in February as the Lunar New Year holiday crimped imports of oil, iron ore, copper and soybeans while exports of aluminum and steel fell.
Inbound shipments of copper tumbled by the most in four years, soybeans to the least since October, while oil and iron ore imports slowed to the weakest in three months, according to customs data released Sunday in Beijing. Steel exports fell for the first time since August and the country shipped the smallest amount of aluminum products in four months.
The slowdown in raw materials trade reflects the impact of the country’s most-important festival, when factories and output slow before and during the weeklong holiday. Total exports gained more than 48 percent from a year earlier in February, driven by a recovery in the U.S. economy. Imports slid 20.5 percent, leaving a record trade surplus of $60.6 billion.
“The Chinese New Year is a major distortion for trade data,” said Xie Zhaowei, a Shanghai-based analyst at Huatai Great Wall Futures. “Demand remained subdued inside China even if you strip out the impact of the week-long holiday as the economy is slowing.”
Chinese Premier Li Keqiang last week announced the country set its economic growth target at 7 percent for this year, the lowest goal in more than 15 years, as headwinds including a property slump, excess industrial capacity and disinflation prompted the second interest-rate cut in three months.
Lagging Growth
Imports of unwrought copper and products in February fell 32 percent from the previous month to 280,000 metric tons, the biggest decline since February 2011. The nation’s imports of ore and concentrates, used to make the refined metal, slid for a second month. Benchmark prices in London are down 9.1 percent this year.
China’s copper demand will grow by 5 percent in 2015, unable to keep pace with the country’s economy as the government shifts its focus away from infrastructure and manufacturing toward consumption, Li Baomin, chairman of Jiangxi Copper Co., the nation’s biggest producer of the metal, said in an interview last week.
Crude imports fell 8.7 percent from January while iron ore imports slid 9.5 percent, both the lowest since November. The country remained a net oil-product importer, with inbound purchases outpacing exports by 1 million tons.
Activity Curtailed
“There have been reports of manufacturing and industrial activity being curtailed earlier than normal leading into the Chinese New Year,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. “It seemed to be greater than previously thought and obviously had a big impact on imports through that month.”
Outbound shipments of steel products fell for the first time in six months as new tax rules designed to cut oversupply in the industry began to slow sales. The country’s shipments fell 24 percent to 7.8 million tons from a record the previous month. Aluminum product exports slid for a second month to the lowest since November.
The weaker trade data will “drive a bearish tone in commodity markets, especially industrial metals,” ANZ said in a note Monday. Copper for delivery in three months on the London Metal Exchange fell 0.4 percent to $5,725 a ton at 12:33 p.m. in Hong Kong.
China’s trade data “is lower than the market expected and is a bit of a surprise as analysts had stripped off the impact of the Lunar New Year holidays and reduced their expectations,” said Helen Lau, a Hong Kong-based analyst at Argonaut Securities. “The commodities import data in February may reflect a weaker domestic demand than we previously expected.”
