Blair Price
Thursday, 25 June 2009
MACQUARIE analysts have noted that China continued to build its strategic commodity stockpiles through May, while coal imports have increased by more than 7000% for the year so far.
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| Hay Point Coal terminal. Courtesy BHP Billiton Mitsubishi Alliance. |
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In a commodities report, Macquarie said China’s May production and net imports data suggested it was continuing to restock.
“Stock building has occurred across most of the base metal markets, as well as iron ore, coking coal and steel,” the investment bank said.
“However, overall stock levels relative to consumption are still low, and the recent accumulation of stock is expected to be depleted quickly.”
Using its own analysis and data supplied by the China Non-Ferrous Metals Industry Association, Macquarie noted that China had imported 21.6 million tonnes of coal from January to May this year.
This level was 7889% higher than the mere 300,000 tonnes imported in the same period last year.
Reuters reported that China’s coal imports hit a record 9.43Mt in May, breaking the all-time record of 9.16Mt achieved the month earlier.
Macquarie said thermal coal and anthracite made up 13.5Mt of the coal imported from January to May, while coking coal soared to 8Mt compared to a mere 900,000t in the same period last year.
Australian Bureau of Agricultural and Resource Economics chief commodity analyst Dr Jammie Penm told ILN this week that Chinese domestic demand was the bright spot when looking at the world economy as a whole.
“Hypothetically, if that strong domestic demand is not there, then I think the alternative scenario would be very pessimistic,” he said.
On whether the increased commodity demand was due to stockpiling or infrastructure development, he said it was difficult to say but referenced the scale of the Chinese government’s 4 trillion yuan ($US585.38 billion) stimulus package.
“If you look at the current situation, given the size of that stimulus package, I think one cannot rule out that there is a genuine demand for infrastructure investment.”
Stricter safety regulations have hampered production from China’s small coal mines this year, encouraging the increase in coking coal imports.
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