COLUMN-Strong China commodity import growth rate may ease: Clyde Russell
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
By Clyde Russell
LAUNCESTON, Australia, Jan 10 (Reuters) - China's imports of key commodities, except copper, were unambiguously strong in December, serving both to confirm the current economic rebound and raise questions about how long it will continue.
Iron ore was the stand out, with imports going above 70 million tonnes for the first time, jumping 7.8 percent from November and taking the 2012 gain to 8.4 percent over the prior year.
Crude oil imports were slightly up in total volumes at 23.67 million tonnes in December from November's 23.37 million, taking the yearly increase to 6.8 percent.
However, in barrels per day (bpd) terms oil imports were slightly weaker at 5.57 million bpd from November's 5.71 million bpd, but they were still above the average of 5.42 million bpd over the whole of 2012.
It wasn't just industrial commodities that were robust, with December soybean imports the second-highest ever at 5.89 million tonnes, making 2012 a record year for inbound shipments of the oilseed.
Copper imports were the weak spot, with arrivals of anode, refined metal, alloy and semi-finished copper products falling 6.6 percent from November to 341,211 tonnes, the second lowest month for 2012.
However, full-year imports were up 14.1 percent on 2011 and December's weakness was largely due to the import price being higher than that in Shanghai and the drop in cash available for financing deals as Chinese firms usually pay back loans at the end of the year.
Overall, the December commodity import figures confirm that the recovery in the world's biggest user is well underway and that the weakness seen in the middle of 2012 was indeed the much-hoped for soft landing.
What the numbers don't tell us is the outlook for 2013 and whether this strength can be maintained.
Iron ore probably has the potential to remain strong, given Chinese steel mills appear to be re-stocking after running down inventories during the uncertainty of the slowdown in the middle of 2012.
It's likely a safe bet that January imports of the steel-making ingredient will stay resilient, but things could be more difficult after that.
The 83 percent rally in Asian spot iron ore <.IO62-CNI=SI> since last September's low of $86.70 a tonne to $158.50 on Jan. 10 will eventually cause buyers to pause, especially if gains in steel prices lag.
The most active Shanghai contract for rebar has gained 23 percent since last September, and while that looks impressive, in isolation it's only about a quarter of the gain in iron ore prices.
Turning to crude oil and it appears that monthly imports of around 5.7 million bpd will become the new norm in 2013.
Last year saw imports run well ahead of implied demand in the first half as commercial and strategic stockpiles were filled, then weakness in the third quarter as inventories were run down and then strength again in the last quarter as new refining units were commissioned and stocks replenished.
While there is always going to be inventory cycles and seasonal demand factors, it appears that China's refiners are largely aiming to keep the domestic market in balance currently.
This means they aren't using surplus refining capacity to boost exports of the refined products, although growth in net imports of fuel is slowing on an annualised basis.
Given that the International Energy Agency expects Chinese product demand to grow to 9.8 million bpd in 2013, and domestic crude output will likely stay around 4 million bpd, this implies monthly imports of crude and refined products averaging 5.8 million bpd.
I would expect the roughly 310,000 bpd of product imports recorded in 2012 to gradually reduce and the imports of crude to rise correspondingly as the Chinese refiners choose to use more of their new capacity.
This will also depend on pricing dynamics as China is likely to be opportunistic in both importing and exporting crude and products.
Overall the outlook is for a fairly strong start to 2013 for Chinese commodity imports, and while growth rates will remain positive, they may slow slightly from the breakneck pace of the last quarter of 2012.
(Editing by Miral Fahmy)