LAUNCESTON, Australia (Reuters) - China's imports of major
commodities in 2024 provided a mixed bag, with high levels of iron ore, coal
and natural gas, but weakening in crude oil.
The raw data for the largest natural resource consumer in
the world indicates that while some sectors of the economy are doing well,
others are having difficulties or are going through structural changes.
The primary difficulty in analyzing China's imports of
commodities, however, is distinguishing short-term causes from shifts that are
a part of a longer-term pattern.
The best illustration of this is probably crude oil.
Customs officials said on Monday that the total amount of
imports for 2024 was 553.42 million metric tons. This amounts to 11.04 million
barrels per day (bpd), which is 210,000 bpd less than in 2023, a 2.1% decrease.
One may argue that 2024 demonstrated that the largest crude
importer in the world had peaked, and that arrivals will decline in 2025 and
beyond.
The primary cause of this is the swift adoption of what
China refers to as New Energy Vehicles (NEVs), a phrase that encompasses both
hybrids and fully electric vehicles, to over 50% of the market.
Although the transition to NEVs is spectacular and is
probably going to continue at a rapid pace, it's important to keep in mind that
China still has a growing fleet of cars with internal combustion engines, which
should theoretically increase demand for gasoline.
The situation with diesel is comparable in that trucks that
run on liquefied natural gas (LNG) are reducing the market share of diesel as a
heavy transportation fuel.
Although official data indicates that crude steel output in the first 11 months
of 2024 was 929.19 million tons, down 2.7% from the same period in 2023, it is
also true that China's steel mills were not purchasing more iron ore because
they were producing more steel.
Instead, a large portion of the excess iron ore was stored
in stockpiles; according to SteelHome, a consulting firm, port inventories
ended last year at 146.85 million tons, up from 114.5 million at the end of
2023.
In 2024, coal imports again reached a record high of 542.7
million tons, up 14.4% from 474.42 million tons in 2023.
The primary factor driving imports was that seaborne pricing
were competitive with domestic output, which encouraged utilities, particularly
in the south of the country, to turn to supplies from Australia and Indonesia.
This was in addition to an increase in the demand for coal due to decreased
hydropower generation and increases in the demand for electricity.
In the week ending December 30, Indonesian coal, which has
an energy content of 4,200 kilocalories per kilogram, was valued at $49.97 a
ton by commodities price reporting agency Argus. This was the lowest price
since April 2021 and a 13.5% decrease for the year.
CALM COPPER
There was one major commodity that had a more steady 2024,
and that was copper, with imports of unwrought copper rising a modest 3.3%
to 5.68 million tons.
Since the record high of 6.68 million tons in 2020, China's
copper imports have held in a fairly narrow range between 5.5 million and 5.87
million.
This is perhaps the best indicator of the true state of
China's economy, given copper's essential role in both manufacturing and
construction.
Copper imports point to slow growth momentum in the world's
second-largest economy, as strong sectors such as NEVs and energy transition
products such as solar panels aren't enough to offset weaker areas such as
residential construction.
The views expressed here are those of the author, a
columnist for Reuters.
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