Tag Archives: Imports

Gold Imports by China Increase for First Time in Four Months

Bloomberg, Oct 27, 2016

Gold_Imports_China

* Worries over weakening yuan, property market may spur demand
* Swiss gold shipments to China rose by almost 80% in September

China, the world’s biggest gold consumer, raised bullion imports from Hong Kong in September for the first time in four months as investors sought to diversify their assets on prospects for a weakening yuan.

Net purchases were 44.9 metric tons from 41.9 tons in August and 96.6 tons in the same month last year, according to data from the Hong Kong Census and Statistics Department compiled by Bloomberg. The mainland bought 64.8 tons compared with 55.2 tons in August, while exports were 19.9 tons from 13.2 tons. Mainland China doesn’t publish the data.

The higher Chinese imports came in a month when global prices and holdings in gold-backed exchange-traded funds rose only 0.5 percent as investors weighed comments from Federal Reserve officials on a possible U.S. interest rate increase. Further weakness in China’s currency and investors’ concerns over the outlook for the nation’s property market may spur gold demand, according to Goldman Sachs Group Inc. 

The offshore yuan sank to a record this week as Chinese policy makers signaled they are willing to allow greater currency flexibility amid a slump in exports and rise in the greenback.

Shipments of gold from Switzerland to China increased to 35.5 tons last month from 19.9 tons in August while exports to Hong Kong declined to 11.5 tons from 24 tons, according to figures from the website of Swiss Federal Customs Administration. The European country is a major bullion-trading center and home to several refineries.

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China’s steady commodity imports are remarkable in context

By Clyde Russell, Feb 16, 2016

China’s imports of major commodities presented a “steady-as-she-goes” picture in January, which doesn’t sound that exciting but should go some way to hosing down some of the more alarmist fears over the state of the world’s second-biggest economy.

In a month where commodity prices were rattled by ongoing global growth fears, and equity markets also stumbled, it has to be reassuring to some extent that the physical flow of commodities to China looked more or less normal.

Worries flared over China’s currency valuation, credit risks and capital outflows, contributing to the MSCI World Index dropping as much as 10 percent in January, while Brent crude oil plunged as much as 25 percent at one point during the month.

China’s crude oil imports did drop to 6.29 million barrels per day in January, a decline of 20 percent from December and 4.6 percent on the same month in 2015.

But seen in the context of December being the record high for crude imports and the Chinese New Year holidays being 11 days earlier this year than in 2015, it becomes clear that the crude imports are within the realms of reasonable variation.

It’s also worth noting that exports of refined fuels fell in January to 679,000 bpd from December’s record 975,500 bpd, meaning less crude was needed for oil product exports.

Crude imports in February are expected to be around 6.63 million bpd, according to assessments by Thomson Reuters Oil Research and Forecasts.

If the February forecast is accurate, it would mean a fairly solid start to the year for Chinese crude demand, continuing the pattern seen last year of rising oil demand for strategic storage and increasing gasoline consumption on the back of higher vehicle sales.

IRON ORE, COPPER

Iron ore imports were weaker in January from the prior month, dropping 14.6 percent to 82.19 million tonnes.

However, as for crude oil, December 2015 had been a record month for iron ore imports, and January’s figure was still 4.6 percent above that for the same month a year earlier.

There was most likely an element of stockbuilding ahead of the early February Chinese New Year holidays, as witnessed by a gain of some 2 million tonnes in port inventories over the month.

But it also seems clear that despite the much-publicised woes of China’s steel sector, which is battling both excess capacity and weak demand, iron ore imports are very far from collapsing.

It would be surprising if they managed to improve on last year’s record 952.8 million tonnes, given expectations of lower steel output in China in 2016.

But overall, the main problem with iron ore isn’t demand, it’s the massive amount of oversupply caused by the overly optimistic forecasts made several years ago by the major miners, which led them to ramp up production to levels sufficient to swamp the market.

Copper continued the January pattern of a drop in imports from elevated levels in December, but still solid when compared with the same month in 2015.

January’s imports were 437,000 tonnes, up 5.3 percent on the same month a year ago, but down 17 percent from December.

In recent months, copper imports have been boosted by buying for inventories, given the industrial metal’s low global price.

While China’s commodity imports for January always come with the caveat of the potential impact of the timing of the Lunar new year holiday, there seems little in the data to cause consternation.

Imports held up well, with the exception of coal, which saw a 9.2 percent drop from the same month a year earlier, although even this may be viewed somewhat positively, as it is a slower pace of decline given the 30 percent plunge for 2015 as a whole.

January’s commodity imports were generally unremarkable, which is remarkable given the turmoil that was taking place in financial markets at the time.

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John Rubino: The Shrinking Global Economy, In Three Charts

By John Rubino, Jan 10, 2016

Regular contributor Michael Pollaro offers three more charts which tell a story that’s both disturbing and apparently misunderstood by a lot of mainstream analysts.

The US trade deficit (exports minus imports) has been getting smaller. Since a trade deficit subtracts from GDP growth, a shrinking deficit will, other things being equal, produce a bigger, faster-growing economy (that’s the mainstream take).

US trade balance

But other things aren’t equal. It turns out that the components of that trade balance figure are both shrinking. Exports — the stuff we sell to foreigners — have been declining since the dollar spiked in 2014. That’s not a surprise, since a strengthening currency makes exports more expensive and thus harder to sell. So other countries are buying less of our stuff, which though not surprising is a bad sign.

US exports

Meanwhile, imports — stuff we buy from abroad — have also plunged in the past year, which is partly due to cheaper oil lowering the dollar value of energy and other commodity imports. But it also means that even though French wine and German cars have become less expensive as the dollar has soared against the euro, we’re not buying more of them. So US consumers, even with all the money they’re saving at the gas pump, still can’t (or won’t) take advantage of a sale on imported goods.

US imports

If imports and exports are both falling, that means consumption is weak pretty much everywhere. And weak consumption means slow or negative growth, which contradicts the recovery thesis that now dominates policy making and the financial media.

It also makes last week’s market turmoil easier to understand. Falling trade means lower corporate profits, which, if history is still a valid guide, means less valuable equities. So it could be that the markets are simply figuring this out and revaluing assets accordingly.

This article is written by John Rubino of Dollarcollapse.com and with his kind permission, Gecko Research has been privileged to publish his work on our website. To find out more about Dollarcollapse.com, please visit:

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Oil Finds a Silver Lining in China’s Thirst for Crude

Bloomberg, Jan 4, 2016

oil

* Imports seen expanding 8% to 7.2 million barrels a day in 2016
* Demand will be driven by stockpiling, independent refiners

China’s insatiable appetite for crude is at least one thing oil bulls can count on this year.

QuickTakeOil Prices

The world’s biggest commodity consumer may buy 8 percent more oil from overseas in 2016, taking average purchases to 7.2 million barrels a day, according to the median of seven respondents in a Bloomberg survey including FGE and Energy Aspects Ltd. The country’s inbound shipments in the first 11 months of last year increased 8.8 percent to 6.63 million barrels a day and touched a monthly record of 7.4 million in April, customs data show.

The prospect of China continuing to absorb a glut of supply from overseas will encourage investors holding out for a recovery in oil from the lowest level in 11 years. The nation, which has overtaken the U.S. as the world’s biggest buyer on occasions last year, is taking advantage of the two-year slump in prices to hoard crude for emergencies. Demand is further expanding as the government relaxes rules to allow imports by private refiners.

“Growth in China’s crude imports is a supportive factor for crude prices,” said Eugene Lindell, an analyst with Vienna-based JBC Energy GmbH, who forecast a growth rate of 6 percent. “It will help tackle the crude surplus seen over the first half year in 2016.”

Left axis: Imports in million metric tons / Right axis: Oil price in $/bbl

Brent crude, the international benchmark, slumped to an 11-year low last month amid speculation suppliers from the Middle East to the U.S. will exacerbate a record glut as they fight for market share. The Organization of Petroleum Exporting Countries raised production to the highest in more than three years in November and effectively scrapped its output ceiling a month later. Meanwhile, the U.S. ended its 40-year export ban and Iran plans to boost output by about 500,000 barrels a day within weeks of international sanctions being lifted.

China may start four additional strategic petroleum reserves this year, augmenting its existing eight, as part of its ultimate goal of stockpiling enough oil to cover 100 days worth of imports by 2020. The country held about 29 days of supply as of the middle of 2015, according to Bloomberg calculations based on National Bureau of Statistics data.

Crude imports for emergency reserves may double to 230,000 barrels a day this year as new tanks start operating, according to Chi Zhang, an analyst with Barclays Plc in Hong Kong. China stockpiled 26.1 million metric tons (about 191 million barrels) of crude as of mid-2015 at eight SPR sites and commercial storage tanks, the NBS said on Dec. 11. The country will build and fill 74 million barrels of SPR capacity this year, according to JBC’s Lindell.

“We expect that nearly 200,000 barrels a day of crude oil will be added to inventory in 2016” including strategic reserves, said Wu Kang, a Beijing-based analyst with industry consultant FGE, who gave the median estimate in the survey. “This is one of the major factors determining crude oil imports.”

Teapot Demand

China’s independent refiners, known as teapots, account for almost a third of the nation’s processing capacity. Thirteen of them have been granted import quotas totaling a combined 55 million tons, or 18 percent of the nation’s annual imports, as the government seeks to promote private investment and boost the economy.

The three teapots with the biggest import quotas have said they’ll utilize their permits this year. Shandong Dongming Petrochemical Group, the nation’s largest independent refiner by capacity, said it plans to fully use its crude-import quota of 7.5 million tons in 2016, while Panjin North Asphalt Fuel Co. and Baota Petrochemical Group said they intend to import 7 million tons and 6.1 million tons, respectively.

Chinese crude imports should rise by at least 1 million barrels a day in 2016, or about 15 percent, given that the teapots have to meet their quotas or risk losing their licenses, said Virendra Chauhan, an analyst at consultant Energy Aspects. Chauhan gave the highest growth estimate in the survey.

The lowest forecast for China’s crude import growth was 3 percent from ICIS China, a Shanghai-based commodity researcher.

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India’s Gold Stash Dwarfs Fort Knox Hoard and Modi Wants It

Bloomberg, Nov 5, 2015

gold_stack

* Government plans to mobilize idle stockpiles of 20,000 tons
* Large imports should be discouraged, finance minister says

There’s about 20,000 metric tons of gold stashed away in India’s temples and households — more than four times the amount that’s held in Fort Knox in Kentucky — and Narendra Modi wants to get his hands on it.

India’s prime minister on Thursday unveiled three state-backed plans to try to tap the stockpiles of the precious metal to trim physical demand and reduce imports by providing people with alternative avenues for investment. At an event in New Delhi, Modi announced the formal start of a gold-deposit plan, a sovereign-bond program linked to the metal’s price and introduction of locally minted coins, some bearing the face of Mahatma Gandhi.

India vies with China as the world’s largest gold consumer, and Modi’s administration wants to draw more of the holdings into the financial system to trim purchases from overseas and boost the country’s economic resilience. Bullion will be a help to India’s growth only when it enters the banking system, and large imports should be discouraged, Finance Minister Arun Jaitley said at the event in the capital, which comes a week before nationwide demand peaks.

‘Take Time’

“The expectations from the schemes in the short term must be tempered as it will take time to build the infrastructure and products and for customer acceptance to grow,” said P.R. Somasundaram, managing director at the World Gold Council in India. “We should see this announcement and launch as a strong indication of an intention to put gold at the heart of the financial system and make it work for the Indian economy.”

The estimate for nationwide holdings of about 20,000 tons came from Modi at the event as he described the stockpiles as idle. That compares with holdings of 147.3 million ounces (4,582 metric tons) squirreled away in the U.S. Bullion Depository in Kentucky, according to data on the U.S. Mint’s website.

Under the gold-deposit plan, investors can deposit a minimum of 30 grams with banks to earn interest, and at maturity either redeem the gold or cash, according to a government statement in June. Banks holding the bullion will be free to sell or lend the gold to jewelers, thereby boosting supply. The planned sovereign-bond issue will be open to investors from Thursday up to Nov. 20, the Reserve Bank of India said on Nov. 3.

Bullion Imports

India imports almost all of the bullion that people consume. The country’s current-account deficit ballooned to a record in 2013, pushing the rupee to an all-time low, mainly because of high gold and oil imports. That prompted the government to seek to restrict bullion imports and renewed policy makers’ focus on the holdings in temples and households.

Bullion demand in Indian usually peaks in the final quarter of the year, with gifting during festivals and continues with the start of the wedding season in November. The festival of Dhanteras, which falls on Nov. 9, is the biggest gold-buying day in the year as it is considered to be an auspicious day to purchase bullion.

Spot gold traded at $1,107.90 an ounce on Thursday, 6.5 percent lower this year.

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