OIL IMPROVES
Crude oil imports are also improving as China's residents
resume travelling after the end of restrictions that were part
of the now abandoned zero-COVID policy, which crimped demand for
much of last year.
China is estimated by Refinitiv to have imported 11.85
million barrels per day (bpd) in February, up from 10.98 million
bpd in January.
If the official numbers are in line with Refinitiv's
estimate, February will be the strongest month for crude oil
imports since July 2020.
The question is whether demand for crude oil will continue
at the high levels of the first two months of 2023, or whether
it will level off as the initial demand for travel after the end
of restrictions is sated.
Much will also depend on whether Beijing keeps encouraging
refiners to export fuels such as diesel and gasoline, with flows
of these products having increased in recent months as China
sought to boost economic activity and to allow its refiners to
capture some of the high profit margins in global fuel markets.
Overall, the current backdrop is positive for China's
commodity demand, with the end of COVID-19 restrictions boosting
fuel consumption and stimulus spending encouraging increasing
steel output.
A robust lift in the main manufacturing activity indexes for
February also boosted sentiment, although this should be
tempered by signs that the rest of the world is starting to
struggle amid persistent high inflation.
But by limiting China's growth ambition to just 5% for 2023,
Beijing may just be putting a cap on expectations of how much
commodity demand can rebound this year.
The opinions expressed here are those of the author, a columnist
for Reuters.
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INTERACTIVE GRAPHIC - China trade and economy snapshot: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Jamie Freed)
(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, March 6 (Reuters) - China's
decision to set a modest 5% economic growth target for 2023 may
knock some optimism out of commodity markets, which had been
anticipating a surge in demand from the world's largest buyer of
natural resources.
The 5% target was set on Sunday as China kicked off its
annual session of the National People's Congress, with outgoing
Premier Li Keqiang stressing the need to bolster economic
stability and boost consumption.
What this likely means in practical terms is Beijing will
continue to stimulate critical parts of the economy, most
notably by boosting construction and infrastructure, while also
trying to lift consumer confidence and spending.
The 5% growth ambition is clearly an improvement on the
tepid 3% expansion of gross domestic product achieved in 2022,
but it's also hardly likely to fuel expectations of a surge in
demand for commodities.
If the target is achieved, what will it likely mean for
commodity imports in 2023?
It's worth starting by looking at what happened last year.
Imports of most major commodities were soft in 2022, with
China seeing declines in arrivals of crude oil (-0.9%), natural
gas (-2.5%), iron ore (-1.5%) and coal (-9.2%).
Copper was the exception, with imports of the industrial
metal rising 6.2% in 2022 from the prior year, but this was
partly driven by a higher domestic price in China, which
attracted flows from the rest of the world.
An acceleration of economic growth to 5% implies that more
commodities will be required, and probably to the extent that
China's imports will return to positive territory.
Already there are some signs of a pick-up in commodity
demand, especially for iron ore, the key raw material for steel.
Iron ore imports are estimated by Refinitiv at 91.81 million
tonnes in February, down from 100.55 million in January, but
this works out to be an increase in imports per day, with
February coming in at 3.28 million tonnes a day, up from
January's 3.24 million, because February is a shorter month.
The Refinitiv estimate for the first two months of this year
also is an acceleration from the official customs numbers of
90.86 million tonnes of imports in December.
This indicates that steel mills have been buying more iron
ore in expectation of higher demand as the construction season
gets into full swing as winter comes to an end.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.