Copper, Resource News

China Copper, Iron Ore Imports Drop for Third Month in June, but Oil Hits Record

Preliminary June Chinese trade figures continued to show month-on-month declines in the appetite for most industrial commodities in China. The monthly figures show that copper and iron ore inflows, key barometers of economic activity in China, were considerably smaller than the seasonal trends would suggest. Similarly, Chinese purchases of the aluminum complex products also declined more than is normally associated with seasonal trends during this time of year. In sharp contrast, oil imports jumped sharply during a month in which they tend to drop.

Imports of unwrought copper fell 17.3% m/m to 328kt in June, while iron ore imports fell 9.1% m/m to 47.17Mt. Crude oil imports jumped a strong 24.8% m/m to a record 22.27Mt. However, so far this year, most commodity imports are still trending at healthy levels. Alumina imports, a primary ingredient in aluminum production, dropped 69.7% m/m to 140kt, while unwrought aluminum imports fell 21.1% m/m to 74.6kt.

Markets have generally responded negatively to the Chinese commodity imports news, with copper and iron ore trading lower.

Seasonality should be only a modest negative for Chinese import levels of copper and iron ore in the next several months, with a material upward lift in September. For that reason, along with the fact that imports were much lower than seasonality suggested in June and given BMO Research’s projections of continued global and Chinese economic growth, it is likely imports of copper and iron ore should improve later in the year. This should also help prices to move higher materially after the summer.

Source: BMO Capital Markets