Home Commodities China’s Appetite for Commodities Sapped by Virus, Surging Prices

China’s Appetite for Commodities Sapped by Virus, Surging Prices


(Bloomberg) — China’s appetite for many of its key commodities remained subdued in May as a cocktail of surging international prices and domestic virus restrictions, including the city-wide shutdown of Shanghai, sapped demand.

Coal and gas shipments continued to languish, according to customs data on Thursday, due to milder weather, and as a weaker economy and the impact of the war in Ukraine on energy markets dissuaded importers. Crude imports were a bright spot, rising to 45.8 million tons and the highest since January, although the figure may have been inflated by more oil arriving at discounted prices from origins like Russia, Iran and Venezuela. 

Coal imports dropped to 20.5 million tons, lower than both April and a year earlier, with shipments also affected by strong domestic production and price controls, as well as increased electricity generation from hydropower. Gas imports picked up from April to 9.1 million tons, but were still 12% lower on year.

For metals, copper imports stayed around the lows hit earlier in the year, while copper concentrate purchases hit a record of 2.19 million tons as domestic smelting capacity continued to expand. Iron ore shipments also improved, including from Australia’s main port for shipments, rebounding above 90 million tons for the first time since January as traders stocked up in anticipation of government infrastructure spending to arrest the slowdown in the economy.

On the export front, aluminum sales from the world’s biggest producer rose to a record of 677,000 tons, fueled by growing shortages outside China due to disruptions to supply caused by Russia’s invasion of its neighbor.

Among farm goods, soybean purchases hit an 11-month high of 9.67 million tons. Some of that demand may have been due to buyers replacing other oilseeds, as edible oil imports remained depressed amid a global spike in prices and export restrictions on palm oil from top supplier Indonesia. 

The broader trade figures showed a pick-up in both imports and exports, reflecting China’s success in bringing the outbreak under control, albeit at a bruising cost, which allowed for a partial recovery in operations at factories and the world’s largest port in Shanghai. 

Still, it’s a risky proposition to expect commodities demand to be back on track from June. The renewed lockdown of one district in Shanghai has raised concerns that a full reopening of the financial center could be delayed by a resurgence in cases, with China’s Covid Zero policy likely to act as a brake on trade flows for as long as it persists. 

Events Today

(All times Beijing unless shown otherwise.)

  • China to release May aggregate financing & money supply by June 15
  • China’s 1st batch of May trade data, incl. steel, aluminum & rare earth exports; steel, iron ore & copper imports; soybean, edible oil, rubber and meat & offal imports; oil, gas & coal imports; oil products imports & exports, from 11:00
  • China Photovoltaic Industry Association hosts webinar, 14:00
  • USDA weekly crop export sales, 08:30 EST

Today’s Chart

Claims that aluminum stockpiles have been over-pledged continue to hurt confidence in the market. Spot prices in Foshan city, where the allegations surfaced last week, are trading at the steepest discount to futures since October, according to Shanghai Metals Market, as buyers remain wary given the uncertainties around ownership of the metal.

On The Wire

China’s fertilizer exports from January to May tumbled to the lowest level in four years, signaling that supply constraints persist on the global market even as prices retreat from a record. 

China’s factory-gate inflation likely continued to slow in May due to a higher year-earlier base in commodity prices and the impact of lockdowns.

  • China’s Carbon Market Faces New Delays on Data Collection
  • Battery Giant CATL Denies Rumor of Poor Earnings on Futures Loss
  • Major Chinese Hog Breeder Reports Overdue Debt After Big Losses
  • China’s Xi Hears Efforts to Boost Grain Output Amid Food Worries
  • Shanghai’s Logistics Capacity Almost Recovered, Sec. News Says
  • China Property Market Has Not Bottomed Out Yet, Sec. Times Says
  • China’s Copper Output Slips as Aluminum Continues to Expand: SMM
  • IRON ORE FLOWS: Australian Exports Up 1.1% W/w to 17.9 Mln Tons
  • Sungrow Downgraded at Daiwa Over Risks on Vietnam Impairment
  • China Coal Demand’s Rebound May Not Boost CO2 Emissions in 2022
  • Russia-China 2021 Pipeline Gas Flows Jumped to 10.4Bcm: Gazprom
  • WAF CRUDE: Angolan Oil Sells Faster as China Buying Rises

The Week Ahead

Friday, June 10

  • China inflation data for May, 09:30
  • China weekly iron ore port stockpiles
  • Shanghai exchange weekly commodities inventory, ~15:30
  • China farm ministry’s monthly crop supply-demand report (CASDE)
  • USDA’s monthly world crop supply-demand report (WASDE), 12:00 EST

©2022 Bloomberg L.P.

Source link

Previous articleWhat’s the global dairy commodity outlook? Maxum Foods forecasts constrained milk output
Next articleBillionaire Mike Novogratz says two-thirds of crypto hedge funds will go bankrupt


Please enter your comment!
Please enter your name here