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A warning shot has been fired across the bow of proponents of the view that commodities are entering a new super-cycle: China’s imports of crude oil, iron ore, copper and coal in the first two month of the year look far from bullish.

China is the world’s largest importer of all these major commodities. It’s also dominant in the two - iron ore and copper - that are perhaps the most important for backers of the theory that efforts to decarbonise the global economy mean the dawning of a new era of rising prices.

On the face of it, China’s imports of major commodities in January and February appear to show some growth, especially in year-on-year terms. But breaking them down reveals signs that the appetite of the world’s second-largest economy for natural resources may be waning slightly.

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Iron ore imports in the first two months were 181.5 million tonnes, up a reasonable 2.8% from the same period last year, according to official customs data released on March 7.

China customs doesn’t provide separate figures for January and February, combining the two months in a move that may serve to smoothe out the data given the variable timing of the Lunar New Year holidays during the period.

Iron ore’s modest year-on-year gains start to look less impressive when compared to the preceding months.

If converted to daily imports, the January-February period saw arrivals of 3.08 million tonnes per day. That’s down from 3.12 million and 3.27 million in December and November respectively.

In fact, the performance at the start of 2021 was the weakest on a daily basis since May last year - when China was still restarting its economy after the lockdowns imposed to combat the spread of the novel coronavirus.

It’s a similar story for copper. The first two months of 2021 saw imports unwrought copper of 884,009 tonnes, up 4.65% from the same period in 2020.

But on a tonnes per day basis, the January-February imports are 14,980 tonnes, down from 16,530 tonnes in December and 18,710 tonnes in November.

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COAL SWINGS

Coal is a commodity that tends to be volatile around the turn of the calendar year as the market tries to adjust to unofficial restrictions China applies to import volumes.

But even allowing for this dynamic, coal imports in the first two months of the year were 41.13 million tonnes, down 39.5% from 67.94 million in the same period in 2020.

Converting to daily imports gives a reading of 697,000 tonnes per day in the first two months of 2021, down from 1.26 million in December though above November’s 389,000.

The December imports were boosted by a domestic shortage of the fuel as a colder-than-expected winter pushed up demand. But even putting November and December together shows imports of about 825,000 tonnes per day, comfortably higher than the January-February period.

Crude oil imports in the first two months of year were 89.57 million tonnes, equivalent to about 11.08 million barrels per day (bpd).

This was up 4% from the same two months in 2020, and also higher than the 9.06 million bpd in December and in line with November’s 11.03 million bpd.

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Does this show that crude oil imports were an area of strength in China in the first two months of 2020?

The answer is more nuanced. Imports in the first two months of this year were largely boosted by independent refiners buying more after receiving new import quotas for the new year.

This process is unlikely to continue, meaning there may be some pullback in imports from March onwards. It’s worth noting that the start-up of several new refining units will provide a structural boost to China’s crude imports.

Still, crude oil prices at the strongest levels in a year may serve to damped import demand - especially given China likely has the ability to draw down on inventories built up during last year’s price war and pandemic.

Overall, the picture that emerges from the commodity import data is that China is at best ticking along. Demand growth is modest, and certainly nowhere near levels that would lend support to the narrative of a new China-led super-cycle.

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