A coil of copper rod in a factory. — Reuters
CHINA’s imports of major commodities were largely soft in October as high prices weighed on volumes, with iron ore’s resilience bucking the trend despite the steel sector showing signs of pressure.
Crude oil, natural gas, copper and coal all showed declines from September, according to data released last Friday by the General Administration of Customs.
China, the world’s biggest importer of crude oil, saw arrivals of 11.39 million barrels per day (bpd) in October, the third straight monthly decline and down from 11.50 million bpd in September.
The easing in oil imports is most likely a reflection of the higher global prices that prevailed at the time when October-arriving cargoes would have been arranged.
Benchmark Brent futures hit a six-month high of US$81.40 a barrel on June 23 during the brief conflict between Israel and Iran, and while they retreated to a low of US$66.34 by July 1, they once again trended higher to reach US$73.63 by July 31.
Since then, oil prices have been declining on a trend basis, with the occasional spike higher, largely caused by geopolitical events such as the announcement of new sanctions on Russia’s crude producers by US President Donald Trump.
Brent ended at US$63.63 a barrel last Friday, and the current lower prices are likely to encourage China’s refiners to increase imports, even if much of the crude flows into commercial and strategic storages.
The impact of higher prices can also be seen in imports of natural gas, which totalled 9.78 million tonnes in October, down 11.5% from September’s 11.05 million and 7.2% below the 10.54 million from October last year.
It’s likely that pipeline volumes from Central Asia and Russia were largely steady, meaning the decline was from imports of liquefied natural gas, which have been trending weaker this year amid elevated spot prices caused by European demand for the super-chilled fuel.
Higher prices are also likely behind the 9.7% drop in imports of unwrought copper in October from September.
October arrivals were 438,000 tonnes, down from 485,000 tonnes in September and 506,000 tonnes in October 2024.
Copper prices have been trending higher since April, but the gains accelerated from late September, with London contracts jumping 12.8% from US$9,927.50 a tonne then to a record high of US$11,200 a tonne on Oct 29.
But it’s not always prices driving China’s commodity imports, with coal being a case in point.
Imports of all grades of coal dropped 9.3% in October to 41.74 million tonnes from September’s 46.0 million tonnes, and were also down 9.8% from October last year.
The lower imports came as seaborne thermal coal prices languished near five-year lows, with commodity price reporting agency Argus assessing Indonesian coal with an energy content of 4,200 kilocalories per kg at US$40.45 a tonne in the week to July 4.
The grade, which is popular with Chinese utilities, has since recovered to US$47.09 a tonne in the week to Nov 7, but still remains well below the US$52.30 from the same week in 2024.
However, with the northern winter imminent and higher domestic coal prices, it’s likely China’s imports will recover heading into the end of the year.
Iron ore was the surprise packet of China’s commodity imports in October, with arrivals of 111.31 million tonnes.
While this was down 4.3% from September’s record high of 116.33 million, it was up 7.2% from October last year and was also the fifth consecutive month that imports have topped 100 million tonnes.
The strength in imports isn’t price-related, as benchmark contracts in Singapore have been stable in a relatively narrow range anchored around US$100 a tonne so far this year.
Steel production has also been soft, dropping to a 21-month low in September of 73.49 million tonnes, with output for the first nine months of the year down 2.9% from the same period in 2024.
It appears that the strength in iron ore is largely because inventories are being rebuilt, with port stockpiles monitored by consultants SteelHome rising to 138.44 million tonnes in the week to Nov 7, a seven-month high and up from the low so far this year of 130.1 million tonnes in early August.
With inventories still shy of the 150.7 million tonnes they reached in November last year, there is still scope for iron ore imports to remain resilient heading into the end of the year. — Reuters
Clyde Russell is a columnist for Reuters. The views expressed here are the writer’s own.
