China Buys Record Commodities Haul to Fuel Post-Virus Recovery

(Bloomberg) --

China’s imports of raw materials, from oil to soybeans to copper, surged to records last month as the top commodities consumer fuels a recovery from the pandemic that has slammed global growth and roiled markets.

Shipments of crude and soybeans rocketed in June as cheap cargoes bought during the depths a price crash continued to arrive, while unwrought copper and iron ore purchases jumped on expectations Chinese manufacturing activity will unlock demand.

The country first hit by Covid-19 is indicating signs of an economic revival, with figures released Tuesday alongside commodity trade data showing China’s overall exports and imports both rose last month. The surprising increases come as some developed economies started to reopen, potentially bolstering the outlook for exports from the Asian nation in coming months.

“Import volumes were particularly strong, which points to robust domestic demand as well as some opportunistic buying when prices were low,” Capital Economics said in a note. Monthly imports may dip after recent rises in commodity prices, and a further pickup in economic activity elsewhere should give a lift to China’s exports, it said.

The world’s second-biggest economy imported the most oil ever last month as a long line of vessels carrying cheap oil waits to offload shipments at already-swollen storage tanks. The Brent crude benchmark averaged a little over $40 per barrel last month, compared to $63 last year.

Likewise, a record haul of soybeans arrived after crushers increased purchases from Brazil to profit from cheap supplies amid rising demand for animal feed as the hog herd recovery gains traction. China’s natural gas imports jumped 11% from last year due in part to an uptick in buying of seaborne deliveries, while other North Asian nations cut back shipments.

Meanwhile, purchases of unwrought copper and products jumped to a record, while iron ore imports neared an all-time high despite a recent price rally. Data also showed the different trajectories underway in the global steel market, with Chinese imports climbing to levels unseen since the global financial crisis and exports dropping to their lowest in eight years.

©2020 Bloomberg L.P.