By Clyde Russell
LAUNCESTON, Australia (Reuters) – China's exports of large commodities in 2024 showed a mixed bag, with record iron ore, coal and, but weakness in.
Raw data for the world's largest consumer of natural resources suggest that some economies are operating stably, but others are struggling, or going through structural changes.
However, the main challenge in analyzing China's manufacturing trade is to distinguish temporary factors from changes that are part of a long-term trend.
Crude oil is perhaps the best example of this.
Imports in 2024 were 553.42 million metric tons, according to customs data released on Monday. This equates to 11.04 million barrels per day (bpd) and 2.1%, or 210,000 bpd from 2023.
It is tempting to say that 2024 marked the peak of the world's largest pollutant, and that 2025 and subsequent years will see lower arrivals.
The main reason for this is the rapid takeover of more than 50% of the market for what is called China's New Energy Vehicles (NEVs), a term that includes both fully electric vehicles and hybrids.
While the shift to NEVs is attractive and likely to continue apace, it's worth noting that China's fleet of internal combustion engine vehicles is still growing, so in theory there should be demand for gasoline.
The picture for diesel is similar as the alternative eats up market shares of the fuel for large vehicles, with trucks powered by liquefied natural gas (LNG).
Imports of natural gas from China, as LNG and pipelines, increased by nearly 10% in 2024 to 131.69 million tons.
But perhaps the most important factor driving lower crude oil imports is price, with futures holding above $70 a barrel throughout 2024 except for two days in September when it briefly sank to this level.
The stability of crude prices this year reflects the production discipline of the OPEC+ group of exporters, who have cut 5.5 million bpd in potential supply.
But it's likely that Chinese refiners will take the view that crude prices are higher than they should be, and scale back their purchases accordingly.
Iron ore, COAL REPORTS
On the side of weak raw material imports amid higher prices, it appears that record iron ore and coal imports were achieved largely due to lower costs.
Imports of iron ore increased by 4.9% in 2024 to 1.236 billion tons, a gain of 57.5 million tons.
The price of steel contracts traded on the Singapore Exchange (OTC:) had its 2024 peak at the beginning of the year, hitting $143.60 on January 3.
They then declined to a low of $91.10 on September 10, before rebounding to end the year at $103.61.
But the 28% year-on-year decline was enough to prompt Chinese metal mills and traders to increase purchases, especially in the second half of the year when prices were lower than the first half.
It is also the case that China's steel mills are not buying more because they are making more steel, with official data showing that iron ore production in the first 11 months of 2024 was 929.19 million tons, down 2.7% from the same period. 2023.
Instead, most of the extra ore has been put into storage, with inventories monitored by consultants SteelHome ending last year at 146.85 million tonnes, up from 114.5 million by the end of 2023.
Coal imports hit a record high in 2024, reaching 542.7 million tons, an increase of 14.4% from 2023's 474.42 million.
Coal demand rose amid lower electricity generation and gains in electricity demand, but the biggest boost to exports was that offshore prices were competitive with domestic production, thus encouraging utilities, especially in the south of the country, to turn to supplies from Indonesia and Australia.
Indonesian coal with an energy content of 4,200 kilocalories per kg was assessed by the Argus commodity price reporting agency at 49.97 tonnes in the week to 30 Dec.
UNSTABLE SURVEYING
There was one major product that had a stable 2024 outlook, and that was unwrought copper imports, which increased by 3.3% to 5.68 million tonnes.
From a record high of 6.68 million tons in 2020, China's copper production has held in a narrow range between 5.5 million and 5.87 million.
This is perhaps the best indicator of the true state of the Chinese economy, given the important role of copper in manufacturing and construction.
Copper exports point to slower growth in the world's second-largest economy, as strong sectors such as NEVs and renewable energy products such as solar panels are not enough to offset weak areas such as residential construction.
The views expressed here are those of the author, a Reuters columnist.