Dearth of imports leads to record Chinese surplus

The continuing impact of Covid infections and lockdowns helped China report a record trade surplus of close to $US100 billion in June as exports did better but imports barely moved.

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

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

Iron ore, gas and coal imports also fell – the latter were down 33% from a year earlier in June alone.

Oil, gas and coal imports over 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% drop earlier in 2022.

That 1% rise in imports confirmed the Chinese economy continues to be impacted by weak demand and sluggish levels of activity in manufacturing, even as many of the harsh lockdown controls of April and May have been eased.

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

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

China’s Customs Administration said the trade surplus surged to a record high of $US97.94 billion last month from $US50.14 billion in the same month of 2021 and $US78.7 billion in May.

Exports surged 17.9% from a year earlier, the fastest pace in seven months, due to an easing of logistic obstacles and port lockdowns; while the 1% rise in imports was soft and well under May’s 3.9% rise.

The latest exports figure marked the highest increase in shipments in five months and easily topped the 12% rise forecast by economists.

The key figure for Australian investors – China’s iron ore imports — totalled 88.97 million tonnes in June, down 0.5% from a year ago and around 3% from May’s 92.5 million tonnes.

That saw total imports for the first six months of the year fall 4% to 535.75 million tonnes – imports had been down 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 surged off the back of the Russian invasion of Ukraine.

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

That reflected the aversion Chinese firms have to paying high prices for commodities such as oil, but also to the estimated one million barrel a day drop in oil needs because of the lockdowns in Shanghai earlier in the year.

Natural gas imports fell 10% for the six months to June to 53.57 million tonnes while coal imports were down 17% in the first half to 115 million tonnes as Chinese buyers turned away from high prices from march onwards in the wake of the Russian invasion of Ukraine (which sent thermal coal prices over $US400 a tonne several times, including at the moment).

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

Imports of copper for the six months rose 8.6% for concentrates and ores to more than 12.4 million tonnes, while imports of unwrought copper rose 5.3% to 2.94 million tonnes in the six months.