Commodity import levels down

Iron ore, coal, crude oil, refined oil all record significant price declines in global markets

Commodity imports fell sharpy last month compared with January 2014, a direct result of the economic slowdown, experts say.

Raw materials such as iron ore, coal, crude oil and refined oil have been hitting record low prices on the global market, but import volumes into China, the world's second-largest economy, reported a major plunge in January.

A report from the Royal Bank of Scotland, commenting on China's import and export data, said: "With exports and imports significantly weaker than expected, the January trade data may increase the need for macroeconomic policy measures to support growth."

The report says the recent external trade trends are more likely to lead to further domestic growth support measures than significant policy-driven exchange rate depreciation.

Iron ore imports fell 9.4 percent year-on-year to 78.57 million metric tons compared with the previous month. The import price dropped by 45.1 percent compared with the same period last year to an average of 438.6 yuan ($70.46) per ton, according to the General Administration of Customs data released on Feb 8.

Liu Xinwei, an iron ore analyst with Shandong-based commodities consultancy Sublime China Information Group Co Ltd, says steel prices have fallen even further than iron ore, starting in December, which further cut steel producers' profits, and led to less iron ore being imported.

In addition, more steel furnaces carried out maintenance last month compared with previous years, he says, and China's iron ore imports in February will continue to remain low because of the ongoing maintenance.

Meanwhile, coal imports in January plunged by 53.2 percent year-on-year to 16.78 million tons, the biggest monthly drop in 15 years, with an average price of 415.3 yuan a ton, 18.4 percent lower than the same period last year.

Liu Dongna, a coal analyst with Sublime China, says the decline in coal imports was mainly caused by the government's policy of encouraging domestic coal use and the stricter management of imported coal.

Domestic coal demand is weakening because the economic slowdown has resulted in weaker power consumption as domestic coal prices continued to fall, Liu says.

Affected by the shrinking domestic manufacturing industry and the economic slowdown, China's crude imports also edged lower year-on-year by 0.6 percent last month to 27.98 million tons, says Gao Jian, a crude analyst with Sublime China.

"The main reason for the decline in crude imports, however, might be that China is close to the end of the second phase of expanding its strategic crude storage facilities," he says.

China has been rapidly increasing its crude imports since the global crude price first started to plunge in June last year. In December, crude imports hit a record high of 30.37 million tons.

January crude imports were 2.39 million tons less compared with December, or a 7.87 percent fall month-on-month. Lin Jiaxin, an analyst with ICIS C1 Energy, a Shanghai-based energy information consultancy, says although crude imports fell last month, they were still at a high level.

"China's daily crude refining output was around 1.36 million tons, 0.5 percent down compared with the figure for December, which also contributed to the fall in crude imports," she says.

dujuan@chinadaily.com.cn