(The views expressed here are those of the author, a columnist for Reuters.)
LAUNCESTON, Australia March 7 (Reuters) – China’s imports of major commodities got off to a weak start in 2025, continuing the recent softening trend amid concern over growth momentum in the world’s second-biggest economy.
Imports of crude oil, natural gas, iron ore and copper all declined in the first two months of the year compared with the same period last year, according to official customs data released on Friday.
Coal imports were up in the January-February period compared to the same period in 2024, however, they were down significantly from the levels seen in November and December, suggesting that China’s appetite for the fuel is waning.
The tepid start to the year for the world’s biggest buyer of commodities adds to concerns about the outlook for China’s economy, especially as trade tensions with the new U.S. administration of President Donald Trump show signs of escalating.
Nowhere was this concern more evident than in imports of crude oil, which dropped to 83.85 million metric tons in the first two months, equivalent to 10.42 million barrels per day (bpd).
This is down 3.4% on a barrels per day basis from the 10.79 million bpd reported for the first two months of 2024, and is also below the 11.31 million bpd imported in December.
China combines import data for January and February to smooth out the impact of the week-long Lunar New Year holiday, the timing for which changes each year.
There is the possibility that the stricter sanctions on Russian crude exports introduced in January by former U.S. president Joe Biden cut some of China’s import demand.
But it also appears that Chinese refiners made little effort to source crude from other suppliers to replace any lost Russian cargoes, which is most likely a reflection of the high global crude prices that prevailed in early January.
Brent crude futures hit a six-month high of $82.63 a barrel on January 15, a time when some February- and March-arriving cargoes would have been arranged.
The price has since slipped amid geopolitical and trade tensions to around $69.52 a barrel in Asian trade on Friday, but it’s too early to say if this level is low enough to spark renewed buying from Chinese refiners.
LNG PRICES
High spot prices may also have impacted imports of liquefied natural gas (LNG), with customs data showing arrivals of LNG and pipeline gas at 20.31 million tons, down 8.1% from the 22.1 million recorded for the first two months of last year.
Spot LNG for delivery to North Asia reached a 15-month high of $16.10 per million British thermal units in mid-February, but the price had been around $14 since late November, a level almost double what it was in February 2024.
The picture for coal, the other major energy commodity, was more mixed, with imports of all grades in the first two months hitting a record high for the January-February period of 76.12 million tons, up 2.1% from the 74.52 million last year.
But that number flatters to deceive, as it is also down 29% from the 107.33 million tons for the previous two months of December and November.
Such a sharp decline from the last two months of 2024 most likely reflects that domestic coal output has been strong, and inventories at power plants have been rising, cutting demand for imported fuel.
Turning to metals and imports of iron ore, the key steel raw material, were down 8.4% to 191.36 million tons in the first two months of 2025 from the same period last year.
Imports may have been affected in February by the delay of some cargoes from top producer Australia after a cyclone disrupted shipments from Western Australia state.
However, the outlook for iron ore demand this year is at best cautious, especially in light of the state economic planner’s guidance this week that steel production should be lower this year than in 2024.
Copper, the industrial metal often seen as an economic bellwether, saw imports drop 7.2% in the first two months of the year to 837,000 tons.
The softer demand for unwrought copper is also likely a reflection of higher prices, which London contracts rising from $8,768 a ton at the end of 2024 to a peak of $9,739 on March 5, a gain of 11%.
History shows that when prices of commodities rise sharply, or rapidly, Chinese buyers tend to scale back imports and turn to inventories if needed.
While price rises help explain the weakness in imports of crude oil, natural gas and copper, they are less helpful when it comes to iron ore and coal, both of which saw declining prices in the first two months of the year.
Rather, it’s likely that the price impact added to an already weakening trend for China’s imports of major commodities.
The views expressed here are those of the author, a columnist for Reuters. (Editing by Stephen Coates)
Reuters