BEIJING (Reuters) - China’s imports of crude and iron ore rebounded from multi-month lows to hit record highs in July, as more raw materials were shipped in to rebuild depleted stocks, amid tentative signs of stabilizing activity in the world’s second-largest economy.
Economic growth in China has slowed for nine straight quarters, increasing scrutiny over whether the country’s appetite for raw materials falters in the second half.
Trade data has been volatile this year and some of the rise in commodities imports was also due to delayed shipments arriving in July and the opening of new oil refineries.
China’s overall trade data showed imports jumped 10.9 percent, five times what analysts had forecast, while exports rose 5.1 percent in July.
“These trade numbers are going to give some people a shock especially those predicting the end of the world for China,” said Michael McCarthy, chief market strategist at CMC Global Markets in Sydney.
But some questioned the strength of underlying demand, noting the rebound came after a weak set of data in June and amid a need to replace stocks used in the first half.
Higher processing rates required both oil refineries and steel mills to restock in July, raising shipments of crude to a record 6.15 million barrels per day (bpd), up 14.1 percent on June, and iron ore to 73.14 million tons, up 17 percent.
Soybean deliveries also hit a second straight monthly high at 7.2 million tons, though this was expected as delayed Brazilian shipments arrived and importers replenished stocks.
July arrivals of copper rose 8.1 percent on the month to hit a 14-month high of 410,680 tons, mostly as a result of demand to use the metal as collateral for financing.
Analysts had anticipated a jump in soybean imports in the summer months after a series of delays earlier in the year brought about by port congestion in Brazil, the world’s second largest supplier to the global market.
“This is quite normal,” said Guan Xiangfeng, analyst at Shanghai CIFCO Futures. “Our March and April imports were quite low so this led to the staggering June and July imports.”
The increase in copper shipments, despite seasonally weaker demand, also suggested that orders placed earlier in the year finally arrived in July, analysts said.
Relatively weak data in June - when iron ore imports hit a four-month low and crude shipments were at a nine-month low - could also indicate the data was skewed by port congestion or a bottleneck in customs clearance procedures.
“I would think it has something to do with the fact that the June number was low and there was some catch-up tonnage coming through,” said Graeme Train, an analyst with Macquarie in Shanghai.
But the overall trend was positive, Train added.
“It has been a volatile series of data but I anticipate the trend for strong (iron ore) imports to continue.”
Strong refinery processing rates, expansions and anticipated increases in demand in the second half supported crude buying.
Persistently strong steel production in the first half, which have lasted well into the traditional off-season of July, had also cut iron ore stocks, forcing buyers to stomach an increase in prices to replenish inventories.
“What people are missing is how much China destocked over the first half,” said Macquarie’s Train.
“They will need to at least maintain those inventories and that swing in purchasing activity means that iron ore demand is actually a lot better than people are expecting.”
Reporting by Dominique Patton in BEIJING, Ruby Lian in SHANGHAI, Polly Yam in HONG KONG, Florence Tan in SINGAPORE; Editing by Ed Davies