SHANGHAI: Chinese commodity imports rose strongly in 2013, with coal and iron ore climbing more than 10%, but efforts to reform the world's No 2 economy are already taking the steam out of demand and are likely to drag this year.
Despite the robust headline figures on Friday, annual import growth in crude oil, coal and soybeans slowed markedly from 2012 as Beijing tightened credit to help shift its export- and infrastructure-driven economy towards consumer-led expansion.
Tighter credit conditions, property controls, environmental crackdowns on heavy industry and government pledges to tackle overcapacity will curb appetite for commodities in 2014, analysts said.
"We think the tougher regulatory environment, such as with the financing and pollution crackdowns, is going to dampen the pace of imports in 2014," said Helen Lau, senior commodities analyst at UOB-Kay Hian in Hong Kong.
"There is overcapacity in nearly every sector of China's commodities spectrum ranging from coal and copper to steel. There is clearly enough capacity here to meet domestic demand."
Chinese steel production has already fallen sharply as the government steps up its fight against air pollution, hurting appetite for iron ore and dragging the price of the raw material to a record-low on the domestic futures market.
Still, any slowdown in demand is unlikely to be drastic since China's top leaders have pledged reasonable growth in 2014, and sources at top government think tanks told Reuters they expect a growth target of 7.5% – the same as for 2013.
Data released on Friday showed China's export growth slowed more than expected in December due to a higher comparison base a year earlier and a clamp-down on speculative activities disguised as export deals, missing the official target on foreign trade.
The government will issue fourth-quarter gross domestic product data on Jan 20. A Reuters poll showed annual GDP growth could slow to 7.6% in the fourth quarter, putting 2013 growth on track for the weakest showing in 14 years.
CRUDE OIL, COAL
China's crude oil imports rose 13% in December from a year ago to a record 6.31 million barrels per day as two big refineries reopened, but growth for 2013 was down sharply from nearly 7% in 2012 as demand cooled in the world's second-biggest oil consumer.
Crude demand for this year could rebound slightly from last year's 4% gain as new refineries open, although growth may be capped by a lack of momentum in the broader economy.
Traders had hoped that more firms might be allowed to import crude in 2014 under Beijing's push to open the market, but so far no new quotas have been handed out. Such a decision would normally need to be in place before the start of the new year.
For coal, import growth dropped by more than half from the year before to 13.4% in 2013.
Industry watchers said the pace of growth would likely weaken further as Beijing mulls setting higher standards on coal quality.
China's copper imports inched up 1.3% in December on a month earlier, propped up by contracted shipments even as a cash crunch depressed spot purchases, but arrivals still fell 2.3% in 2013 due to lower term bookings of refined metal.
Higher-than-expected imports by China, the world's top copper consumer, could support copper prices after they slid on Thursday to their weakest since Dec 19 on Thursday.
Arrivals of unwrought aluminium surged to 125,180 tonnes in December, hitting the strongest since July 2009 and up 42.8% from the previous month, the data showed. But full-year inflows fell 17.7% to 963,124 tonnes, from 2012.
A large global supplier of primary aluminium had sold tens of thousand tonnes of spot metal to China in late November and December 2013 at lower-than-market premiums, traders said. Buyers had been mostly end-users in China's southern industrial hub of Guangdong province, they said.
Looking ahead, analysts said Beijing's clampdown on shadow financing may weigh on copper imports in 2014, while an unfavourable price differential between the LME and Shanghai would dent China's appetite in the near term.
Still, plans by the State Grid to boost its 2014 investment by some 20% to 40.35 billion yuan would offer underlying support.
IRON ORE, SOY
China's iron ore imports in December dropped 5.7% from the previous month's record high to 73.38 million tonnes, as slowing steel demand towards year-end curbed purchases of the raw material in the world's top consumer.
But surging steel output through most of the year in the world's largest steel producer drove purchases of iron ore to a record-high in 2013 of 820 million tonnes, up 10% from 2012.
China, the world's top soy buyer, imported a record volume of the oilseed in 2013 as the crushing industry continued to expand capacity to meet brisk domestic demand for protein-rich meat.
China imported 63.38 million tonnes of soy in 2013, a rise of 8.6% from the year before, the preliminary data showed – Reuters.