China’s commodity imports remain elevated in December amid ongoing supply constraints

China’s levels of imports of major commodities remain elevated in December, as domestic demand remained robust amid ongoing supply constraints. Year-on-year growth rates eased slightly, raising some doubt as to continued strong growth in 2018.

Natural gas was the standout, with imports rising 30.2 percent y/y to 7.9 million tonnes. A recent easing in restrictions on coal use in heating had raised fears of weaker gas demand. However, it’s clear that the industrial sector continues to drive overall demand amid China’s ongoing focus on reducing pollution.

Crude oil imports were also strong, up 4.6 percent y/y to 38 million tonnes (8.99mb/d) in December, which resulted in total 2017 imports growing 11.4 percent. Iron ore imports eased slightly from November (-11 percent m/m) as winter cuts at steel mills eventually impacted demand.

However, the y/y fall was much smaller (-5.4 percent) suggesting demand of higher-grade ore from exporters such as Australia and Brazil is still strong. Copper imports were also weaker, falling 8.2 percent y/y to 450,000 tonnes in December. But much of this was due to base effect, with December 2016 imports particularly strong. Meanwhile, last month’s volumes still represent the third highest over the past two years, suggesting demand remains robust.

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