The detailed release of China's commodity trade data for July shows a positive recovery across the board in line with better-than-expected economic data over the past couple of months. Most commodities recorded a strong rise in imports from the previous month, although there was some weakness on a seasonal basis.
The improvement in import demand and strong rise in domestic production have resulted in many commodities recording positive growth in apparent consumption. This is backed by selective stimulus in China in commodity-intensive markets, which should support commodity prices in coming weeks.
|China commodity trade data|
Copper and zinc demand up
As expected, primary copper imports rose 7.2% mom to 352kt, and were also up 13.5% yoy. This was driven mainly by import arbitrage, but we also saw seasonally strong demand. Zinc concentrate imports continue to recover, rising 78% yoy to 197kt.
While refined zinc imports fell 2% mom to 39.5kt, combined with strong production (+23% yoy to 452kt), apparent consumption rose 13% yoy in July, reflecting improving fundamentals.
Tin imports collapse
China imported 1.2kt of refined tin and alloys in July, down 63% yoy. With exports falling to 0.1kt and refined output reaching 12.5kt, apparent consumption was 13.6kt, down 12% yoy.
The weak import number was due to the collapse in Indonesian exports as a result of new purity rules. With these rules coming at a time when demand in China is picking up, we would not be surprised if prices threatened this level in the not too distant future.
Energy demand strong
On the energy side, imports of crude oil grew strongly, up 20% yoy to 26.1Mt. Apparent consumption was up 6.7% yoy although this moderated slightly from last month as refinery runs eased. Thermal coal imports picked up from the lull in June, rising 38% mom to 32.8Mt.
This pick-up in demand is in line with macro indicators showing signs of stabilisation. These include electricity generation, which grew 8.1% yoy and industrial production, which was up 9.7% yoy. (Read Report)
Source : CIMB Research