(Reuters) – Chinese imports of major commodities dropped in August from multi-month highs in July, suggesting that cheap international prices are no longer enough to drive buyers to restock as seasonal demand declines and downstream industries stay weak.
That will dull the outlook for shipments into the world’s No.2 economy of commodities such as iron ore, crude oil, coal and soybeans, especially as the devaluation of the yuancurrency continues to erode price advantages enjoyed by foreign suppliers.
China’s overall imports in August fell 13.8 percent on the year, much sharper than analyst forecasts, while exports performed slightly better than expected, dipping 5.5 percent compared to the same period in 2014.
“Declines in the overall data were to be expected because demand in the market is relatively low,” said Zhang Xiaojin, a coal industry analyst with China’s Everbright Futures.
China on Aug. 11 moved to devalue its currency, making U.S. dollar-denominatedcommodities more expensive for holders of the yuan. Small adjustments in prices could make all the difference in sectors like coal, where lower-cost foreign suppliers have been able to undercut domestic rivals in a bearish market.
Coal imports fell nearly 18 percent from a 10-month high hit in July. With domestic rivals also slashing prices over the month in a bid to maintain sales over the coming months, further declines are likely.
After reaching their highest level of 2015 in July, iron ore deliveries also fell further than expected in August, down 14 percent on the month as China’s steel sector, the world’s biggest, struggled with weak demand and falling prices.
Crude oil shipments reached 6.26 million barrels per day in August, down 13.4 percent compared to the previous month.
A senior trader suggested that importers who make profits from commodity financing rather than physical trading were likely to cut back purchases as a result of the devaluation. But that could be offset in the coming months by China’s relaxation of import license restrictions.
Soybean deliveries plunged 18.1 percent from a record-high set in July to 7.78 million tonnes, but that number is still 29 percent higher than last year as record volumes of cheap South American crop continue to enter the market.
“There are concerns about yuan devaluation and China’s equity market volatility is having its impact but it is still a pretty strong number,” said Paul Deane, senior agricultural economist at ANZ Bank.
Deliveries are likely to decline further until supplies from the United States, the world’s second biggest exporter, become available around November.
China copper imports remained flat in August at 350,000 tonnes with many buyers sticking to bonded stocks and refraining from making any fresh overseas orders. Deliveries of the base metal over the first eight months of the year have fallen 8.1 percent.
