While the demand for commodities in China without a doubt has been weak, that doesn't mean China isn't a buyer in this market, because it is.
What must be understood is the demand now isn't domestic or for exports, but from the fact the prices have fallen so much, China, as it has done historically, is buying up the resources at bargain prices.
When measured by customs data, there are at least 21 commodities China has increased imports in by over 20 percent in July, according to Reuters.
Agricultural imports were especially strong, "with wheat up 158 percent, barley by 67.9 percent, corn by 1,184 percent, cassava by 28.5 percent, rice by 78.2 percent, soy oil by 25.8 percent, palm oil by 53.3 percent, natural rubber by 70.1 percent and sugar by 72.7 percent."
Crude oil imports jumped 29.3 percent in July.
Metals were also strongly represented. Molybdenum imports climbed 139.8 percent; uranium was up 227 percent; zinc ores up 84.5 percent, and silver up 63.3 percent, among others.
Among major commodities, copper ore and concentrates increased 7.2 percent, and iron ore imports were up a modest 4.4 percent.
What was also interesting in this was China's decision to increase imports at a time its currency was extremely weak. While low prices were definitely a part of the impetus, a declining yuan also had to play a part. If the currency loses more value, the cost of imports would rise even if commodity prices remained stable.
It looks like China was pressed into acquiring the depressed commodities before its currency weakened further. Or course China knows what its policy is going to be, and it's possibly a nod to further debasing of its currency after it buys the commodities it wants at low prices.
Showing posts with label China Imports. Show all posts
Showing posts with label China Imports. Show all posts
Tuesday, August 25, 2015
Tuesday, July 10, 2012
China's Drop in Imports Not a Sign of Significant Slowdown
At first glance it appeared after the numbers came out in China concerning that the decline in imports pointed to a disaster in China. But that wasn't and isn't the case, but is rather a reflection of a commodity management strategy by the country.
When China announced its growth in imports had been slashed by almost half of analysts projected in June, traders and investors pushed down the price of commodities and equities, as coupled with weak financial reports from American companies, seemed to point to a catastrophic quarter.
Imports in China fell to 6.6 percent year-over-year in June, dropping from the projected 12.7 percent analysts were looking for.
Exports by the Middle Kingdom, on the other hand, jumped to 11.3 percent, easily surpassing the estimated 9.9 percent analysts estimated.
Most of the decline in imports to the company are a result of Chinese buyers building up commodity inventory over the last several months, which resulted in the need to use up those inventories before buying large in the market again.
For June crude oil and copper imports appeared to be hammered, with copper imports falling by 17.5 percent and crude by 15 percent from the prior month. Most should have known that there was something unusual about those numbers, even with the strained global economic situation we're in.
Expectations are China imports will probably be weak for several months while it works down its inventory.
It was noted by analysts covering China that the low imports have nothing to do with consumer spending in China, as it does in the United States, because Chinese imports are mostly commodities used in for infrastructure projects and manufacturing.
For the annual goal of a growth of 10 percent for China in 2012, China will likely reach it, although economically devastated Europe, along with the weak American economy, make it unlikely China's goal of export growth of 10 percent will be met. Exports are probably going to be more in the 8 or 9 percent range for the country.
Chinese imports should climb in the second half as commodity inventory is used up.
When China announced its growth in imports had been slashed by almost half of analysts projected in June, traders and investors pushed down the price of commodities and equities, as coupled with weak financial reports from American companies, seemed to point to a catastrophic quarter.
Imports in China fell to 6.6 percent year-over-year in June, dropping from the projected 12.7 percent analysts were looking for.
Exports by the Middle Kingdom, on the other hand, jumped to 11.3 percent, easily surpassing the estimated 9.9 percent analysts estimated.
Most of the decline in imports to the company are a result of Chinese buyers building up commodity inventory over the last several months, which resulted in the need to use up those inventories before buying large in the market again.
For June crude oil and copper imports appeared to be hammered, with copper imports falling by 17.5 percent and crude by 15 percent from the prior month. Most should have known that there was something unusual about those numbers, even with the strained global economic situation we're in.
Expectations are China imports will probably be weak for several months while it works down its inventory.
It was noted by analysts covering China that the low imports have nothing to do with consumer spending in China, as it does in the United States, because Chinese imports are mostly commodities used in for infrastructure projects and manufacturing.
For the annual goal of a growth of 10 percent for China in 2012, China will likely reach it, although economically devastated Europe, along with the weak American economy, make it unlikely China's goal of export growth of 10 percent will be met. Exports are probably going to be more in the 8 or 9 percent range for the country.
Chinese imports should climb in the second half as commodity inventory is used up.
Sunday, April 11, 2010
JP Morgan (NYSE:JPM): China Imports Falling
China Trade Deficit
JP Morgan (NYSE:JPM) economist and chairman of China Equities and Commodities, Jing Ulrich, said in a research note that even though China just experienced its first monthly trade deficit in six years in March, fixed asset investment on the domestic will decline, and that will bring things back into balance.
Assuming developed economies start to rebound in 2010, that should result in growing exports for China as well, bringing back a trade surplus to them.
Concerning floating the renminbi, Ulrich said, "The pace of China's export recovery and dynamics of imported inflation will shape the country's approach towards currency valuation. A return to the policy of gradual RMB appreciation would allow China to mitigate imported inflation and promote domestic consumption by boosting household purchasing power in local currency terms."
The March Chinese trade deficit was a reported $7.24 billion.
JP Morgan (NYSE:JPM) economist and chairman of China Equities and Commodities, Jing Ulrich, said in a research note that even though China just experienced its first monthly trade deficit in six years in March, fixed asset investment on the domestic will decline, and that will bring things back into balance.
Assuming developed economies start to rebound in 2010, that should result in growing exports for China as well, bringing back a trade surplus to them.
Concerning floating the renminbi, Ulrich said, "The pace of China's export recovery and dynamics of imported inflation will shape the country's approach towards currency valuation. A return to the policy of gradual RMB appreciation would allow China to mitigate imported inflation and promote domestic consumption by boosting household purchasing power in local currency terms."
The March Chinese trade deficit was a reported $7.24 billion.
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