China, Haikou Xiuying Port, Hainan
The trade war bypasses the commodities sector
A new report from BMO Global Commodities Research said that all Chinese trade is in trouble right now - on a global scale, mining companies have little to worry about.
US trade is in free fall and total Chinese imports are likely to have declined 5% year over year, but, according to BMO, imports of commodities and ores "are continuing their apparently sustained upward trend".
China's iron ore purchases in August amounted to nearly 95 million tons, an increase of 4,2% over July and 6,2% over the previous year, as the customs data show, and marked the highest level of imports since January 2018.
Iron ore imports are expected to set 2019 another record, with 1,12's annual sales of billions of tons. The decline in production due to the deadly dam burst in Brazil in January is still pending.
Chinese imports of copper concentrate also increased 2018 by 10,8% over the same period in the first eight months of the year. Imports of crude copper are carried out at an annual quota of 21,4 million tons, slightly exceeding the record of 19,7 million tons from 2018. The strong result comes despite the zero growth of the worldwide supply of copper ore.
Imports of bauxite, the main producer of aluminum, have soared by more than 30%, and nickel ore to China has increased 2019% in 15.
BMO points out that even coal trade flourishes despite the many import restrictions that Beijing has imposed on fuel.
While the trade war has caused many problems for China in our opinion, the global commodities business model of importing raw materials, having enough process capacity, and ideally exporting a small amount of finished goods as inflation protection, has not shaken it.
Thus, the Chinese procurement of raw materials remains very strategic. In fact, in this regard, oil is increasingly following the path of the metal as both crude oil imports and exports of refined products increase.
BMO / ISE - September 2019
