Shortage of imports leads to record Chinese surplus

The continued impact of Covid infections and lockdowns helped China post a record trade surplus of nearly $100 billion in June, exports improved but imports barely budged.

Exports jumped 17.9%, but imports could only manage a 1% rise for the month and that was once again the real story for China economy watchers from the data. June and the first six months of 2022.

In fact, there were notable declines in commodity imports in June – oil imports at 35.82 million tonnes were the lowest level for a month since July 2018 and reflected the surge in global oil prices during the month. and the impact of the closures in Shanghai in April and May.

Imports of iron ore, gas and coal also fell – the latter down 33% from a year earlier in June alone.

Oil, gas and coal imports in the six months to June were also lower than in the first half of 2021, while iron ore imports were down 4%, but that was better than the 10% decline earlier in 2022.

This 1% increase in imports confirmed that the Chinese economy continues to be affected by weak demand and weak levels of activity in the manufacturing sector, even if many of the severe control measures of April and May have been relaxed.

These restrictions have been replaced in the current surge in Covid numbers by more targeted lockdowns in major cities such as Shanghai and X’ian.

A total of 31 Chinese cities – nearly a quarter of annual GDP – now have some sort of Covid-related testing regime or restrictions

China’s Customs Administration said the trade surplus hit a record high of $97.94 billion last month, down from $50.14 billion in the same month of 2021 and $78.7 billion in May. .

Exports jumped 17.9% from a year earlier, the fastest pace in seven months, due to an easing of logistical hurdles and port closures; while the 1% rise in imports was small and well below May’s 3.9% rise.

The latest export figure marked the largest increase in shipments in five months and easily exceeded the 12% rise predicted by economists.

The key figure for Australian investors – iron ore imports from China – totaled 88.97m tonnes in June, down 0.5% from a year ago and down around 3% compared to 92.5 million tonnes in May.

This saw total imports for the first six months of the year fall by 4% to 535.75 million tonnes – imports had fallen by 10% earlier in the year.

Oil imports for the six months to June fell 3.1% to just over 252 million tonnes as world prices jumped following Russia’s invasion of Ukraine.

June’s 35.82 million tonnes is equivalent (according to Reuters) to 8.72 million barrels per day (bpd) of imports, 19% below the level of 10.8 million bpd in May.

This reflected Chinese companies’ aversion to paying high prices for commodities such as oil, but also the estimated drop of a million barrels a day in oil needs due to shutdowns in Shanghai earlier in the year. year.

Natural gas imports fell 10% for the six months to June to 53.57m tonnes while coal imports fell 17% in the first half to 115m tonnes as Chinese buyers shunned prices high starting in March following the Russian invasion of Ukraine (which sent thermal coal prices above USD 400 per tonne several times, including at this time).

June soybean imports fell 23% year on year to 8.25 million tonnes.

Copper imports for the half rose 8.6% for concentrates and ores to over 12.4 million tonnes, while raw copper imports increased 5.3% to 2.94 million tons during the semester.

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