CRUDE OIL
The modest recovery in China's growth has yet to show up in
some other major commodities, especially crude oil, which tends
to be a lagging indicator given it takes several months from
when cargoes are purchased to when they are delivered and
processed by refineries.
Crude oil imports in the first two months of the year were
1.25% lower at 10.4 million barrels per day (bpd) than the same
period in 2022, according to customs data.
March imports are expected at around 11.18 million bpd,
according to Refinitiv Oil Research, which represents some
acceleration from the official numbers, but hardly the massive
lift in demand being forecast for the whole of 2023 by a range
of analysts and organisations, including the International
Energy Agency and the Organization of the Petroleum Exporting
Countries.
It's likely that China's crude imports will accelerate from
the second quarter onwards as the country continues to reopen
after abandoning its strict zero-COVID policy.
But there are other factors to consider, such as whether
Beijing will continue to provide refiners with quotas to export
refined products, as these tend to boost crude imports to
provide the feedstock for the refined fuel exports.
Price is also an important driver of China's energy imports,
with high prices tending to lead to lower crude imports as
refiners use up some of the large inventories they have
accumulated in recent years.
The impact of price can be seen in imports of liquefied
natural gas (LNG), which dropped sharply in 2022 amid record
high spot prices for the super-chilled fuel.
However, lower prices this year have tempted buyers back
into the market, and China is on track to import 5.39 million
tonnes of LNG in March, according to data compiled by commodity
analysts Kpler.
This would be up from February's 4.96 million tonnes and
also above the 4.77 million from March last 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 Sonali Paul)
(Repeats column published earlier. The opinions expressed here
are those of the author, a columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, March 16 (Reuters) - China's
economic recovery appears to be on track, but is unevenly spread
across sectors, which is likely to result in a similar pattern
for its imports of major commodities.
A slew of data from the world's second-biggest economy
showed some encouraging signs of a recovery in industrial
production, retail sales and fixed-asset investment.
Industrial output rose 2.4% in the first two months of 2023
from the same period last year, retail sales jumped 3.5%, while
fixed-asset investment gained 5.5%.
China publishes combined January and February data to smooth
out distortions caused by the Lunar New Year holiday, which fell
in January this year but was in February in 2022.
Also key for commodity demand was the 9.0% jump in
infrastructure investment in the first two months, but this was
somewhat offset by a 5.7% drop in property investment, although
this was an improvement on the decline of 10% for 2022 as a
whole.
Infrastructure and property construction are key drivers of
demand for copper and steel, and its raw materials of iron ore
and coking coal.
The rising spending on infrastructure and signs of less
weakness in property investment are already showing up in
China's iron ore imports.
China takes about 70% of global seaborne iron ore volumes
and its imports for March are estimated by Refinitiv at around
94 million tonnes, while commodity analysts Kpler have a higher
forecast of 99.96 million.
This would put daily imports in a range between 3.03 million
and 3.22 million tonnes, slightly below the official customs
figure of 3.29 million for the first two months of 2023.
However, it's worth noting that the January-February outcome
was the strongest on a daily basis since September last year.
China's steel output also rose in the first two months of
2023, gaining 5.6% from the same period last year to reach 168.7
million tonnes.
Iron ore imports and steel output tend to be leading
indicators of commodity demand in China, the world's largest
importer of natural resources, as mills tend to ramp up
production ahead of anticipated demand for building and
manufacturing.
The iron ore imports for the first quarter and the steel
output data for the January-February period do suggest
increasing activity, but they aren't so strong as to point to a
huge rebound in China's economy.
Rather, the data seems to be broadly supportive of a solid
start to achieving China's stated economic growth target of 5%
for 2023.
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