China's demand for imports of commodities showed a surprise bounce in September after retreating from historically high levels seen in the middle months of the year, customs data showed on Wednesday.
The most eye-catching increases were in industrial metals, with iron ore arrivals at a monthly record of 64.6 million tonnes and copper imports jumping 23 per cent from August to 400,000 tonnes, surprising industry experts.
"Commodity import growth was stunning in September," said analysts at Bank of America-Merrill Lynch in a note to clients. "The strong demand for commodity imports reflects resilience in construction and industrial production activities domestically."
Iron ore imports had been widely expected to fall as steel prices waned in the face of uncertain demand. China's rampant production of steel has raised the spectre of oversupply, with the China Iron & Steel Association warning of a 50 million tonne overhang this year - roughly a 10 per cent surplus, or more than Germany's total production last year.
With a hazy picture of real demand thanks to a lack of data on inventories of steel products, China's huge steel sector has little incentive to slow down, since the government's carrots and sticks - a $586-billion economic stimulus and threats to shut small, inefficient mills - both give a reason to produce more.
September's iron ore imports did not just bounce back from August, but trounced the previous record import figure, the 58.1 million tonnes seen in July.
The copper imports figure was not a record and somewhat murkier, since the figure includes copper products, alloy and anode as well as refined copper. But the surprise rise was enough to lift copper prices more than 1.5 per cent.
"The Chinese economy is obviously strong and that has created demand for copper," said David Moore, commodity strategist at the Commonwealth Bank of Australia.
"It's still likely to fall back from current levels, but I had expected it to fall this month as well, so I would have to rethink the world a little bit given that data."
China's overall trade figures were also better than expected.
Several analysts pointed to China's extended National Day holidays as a possible explanation for the surging trade, suggesting that buyers had imported more to ensure supplies while markets were shut during the first eight days of October.
If so, that could set up a big apparent reversal in trade when figures for October are published next month.
But others said the imports were spurred by cheap freight and an improving world economic outlook, or had been booked before the pull-back in China's year-long buying rush.
Trade in steel products and aluminum sped up in September, with both imports and exports rising from August, reinforcing industry talk of a turnaround in global demand after a half-year where it seemed the only thing preventing total price collapse in many markets was China's relentless buying.
"China has emerged as the fastest-growing major economy within the G20 and its metals-intensive industrialization has once again become the key demand driver for the sector," Morgan Stanley's global mining and metals team said in a quarterly research report published on Wednesday.
Other commodities that saw record Chinese buying earlier this year slowed down in September. Crude oil shipments eased to 4.19 million barrels per day, still 14 per cent up from a year earlier, while soybean imports fell to the lowest in almost a year as China wound down its biggest ever strategic stock-build.
But the thinner roster of soybean shipments may have given a boost to soyoil imports. The Customs figures released on Wednesday did not show soyoil, but gave a strong 970,000 tonnes figure for edible oils imports overall, including soyoil, rape oil and palm oil.
Traders said that figure, the second largest monthly tally since Sept 2007, was likely to include at least 600,000 tonnes of palm oil due to favourable prices, as well as a high soyoil component.
China's Customs office will release final data, including a country-by-country breakdown, on Oct. 22.