China's imports of major commodities show rising price sensitivity

Reuters

4 days ago

LAUNCESTON, Australia, July 15 (Reuters) - China's imports of major commodities presented a mixed picture in the first half, but if there is a clear trend it is that the world's top buyer of natural resources is increasingly sensitive to prices.
Crude oil imports were barely higher over the first six months from the same period last year, liquefied natural gas (LNG) arrivals were weak, as were coal imports.
Copper was mixed, with lower arrivals of refined metal, but higher shipments of ores and concentrates, while iron ore imports were slightly softer, according to official data released on Monday.
The traditional market view in commodities is that demand and supply fundamentals lead prices, but China is increasingly a case where its level of imports react more to prevailing prices.
Crude oil is a good example of this.
For the first quarter of 2025 China, the world's largest importer, saw declining arrivals, with imports dropping 1.5% from the same period in 2024.
However, the second quarter saw increasing crude imports, culminating in arrivals of 12.14 million barrels per day (bpd) in June, the strongest month since August 2023.
The increase in second quarter imports was enough to turn the first half total positive, with arrivals up 1.4% from the first six months of 2024.
The main driver of the change in imports in the second quarter was prices.
Global benchmark Brent futures were on a declining trend during the period when second quarter-arriving cargoes would have been arranged.
The price dropped from a high of $75.47 a barrel on April 2 to a four-year low of $58.50 on May 5.
Conversely, the soft imports from the first quarter came against a backdrop of rising prices during the window when those cargoes would have been bought.
Brent went from a low of $70.85 a barrel on December 6 to a six-month high of $82.63 on January 15, meaning China's refiners were facing rising import costs for cargoes arriving in the first quarter.
The same price dynamic was at work with LNG, with spot prices for delivery to North Asia reaching a 15-month high of $16.10 per million British thermal units (mmBtu) in the week to February 14.
Strong European demand for LNG has kept Asian spot prices elevated, with the usual seasonal decline after the winter peak being far less pronounced in 2025.
This in turn has led to a sharp drop in LNG imports, with commodity analysts Kpler estimating a 22% drop over the first half to 30.24 million metric tons.
The weaker LNG imports were enough to drag China's total natural gas imports of both the super-chilled fuel and from pipelines down by 7.8% in the first half, according to official data.
Copper is another example of price effects on China's imports, albeit in a somewhat different form.
China's imports of unwrought copper dropped 4.6% in the first half to 2.633 million tons.
This was largely because copper imports by the United States surged as traders anticipated the imposition of tariffs by President Donald Trump, with a 50% duty being announced last week.
In effect, copper cargoes destined for China were diverted to the United States, netting a profit for both the Chinese buyers, who received a premium, and for the traders as they were able to get cargoes into the United States prior to the tariff, and now can take advantage of massive premium that now exists for the industrial metal.
But while imports of refined copper were lower, arrivals of ores and concentrates rose 6.4% in the first half to 14.75 million tons, a sign that demand from smelters remained robust.
Iron ore also shows the impact of prices, although this is largely a picture of modestly lower imports amid largely steady prices.
Iron ore imports dropped 3.0% in the first half to 592.21 million tons amid slightly lower steel output and declining port inventories.
Singapore-traded iron ore contracts ended at $97.70 a ton on Monday, and have traded in a $15 range so far in 2025 with a midpoint around $99.
This stability has contrasted with the far wider ranges seen in other commodities such as crude oil and copper.
Perhaps the only major commodity imported by China that isn't showing price sensitivity is coal, where both import volumes and prices have been declining.
China's coal imports dropped 11.1% in the first half to 221.7 million tons, while the main Indonesian and Australian grades supplied to China fell to four-year lows, according to assessments by commodity price reporting agency Argus.
China's domestic coal output rose a solid 6% in the first five months of 2025 compared to the same period in 2024, cutting the need for imports.
But the overall message from China's commodity imports is that for commodities that it doesn't control the supply chains or dominate buying, China is becoming far more responsive to changes in prices and will adjust import volumes accordingly.
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The views expressed here are those of the author, a columnist for Reuters.