1、Commodities Research21 January 2013Feeding the dragonDecember trade data: Mixed trends,point at what is to come in 2013December proved a mixed month for Chinas commodity imports. Imports of someimportant agricultural commodities like corn and wheat fell quite sharply, whilst refinedcopper imports co
2、ntinued to trend steadily lower, but crude oil imports maintainedtheir Q4 surge. These differing patterns show that, as Chinas importance incommodities markets grows, its impact is becoming more diverse with relative pricesand differences in stocking cycles becoming as important, if not more so, tha
3、n theunderlying economic growth trend. As Chinas recovery takes root, the impact is likelyto be felt to very different degrees in its import demand for different commodities.Many of the trends evident in the Q4 data are ones we expect to persist into 2013. Inindustrial metals, demand for intermediat
4、e and raw materials like alumina and basemetals concentrates continues to grow much faster than imports of metal. Althoughimports of alumina may slow this year, we expect import demand for copperconcentrate and nickel ores to continue growing at the expense of metal demand asmore metal is produced b
5、y domestic processors. The flipside of this is that demand formetals imports in many sectors could be flat to down and the weakness in Chinascopper imports in particular is likely to persist. In contrast, we expect zinc importdemand to remain strong since, after a recent clamp down on copper financi
6、ng, zincnow appears to be the metal of choice for this type of business.In oil markets the strength of Q4 demand partly reflects the start-up of new refiningcapacity and a surge in product exports as well as better domestic demand for gasolineand diesel, plus lower fuel oil imports to feed small loc
7、al refiners. We expect all theseissues to be important in 2013 and, although the recent pace of y/y growth in oildemand of almost 800kbpd will not be maintained, we still forecast a sizeable increasein demand growth from 330kbpd in 2012 to 460kpb in 2013.In agricultural commodity markets, imports co
8、ntinued to be volatile on a month-on-month basis especially for corn which fell by a third in December. However, thatvolatility is taking place around a strongly increasing trend. 2012 marked a record forcorn and soybeans imports and an 8-year high for wheat. However, whilst we expectsoybean imports
9、 to continue setting fresh highs, that is less likely in corn where a verybig expansion in domestic supply raises the risk of a decline in Chinas corn importdemand in 2013.PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 9,Kevin Norrish+44 (0)20 7773 Gayle Berry+44 (0)
10、20 3134 Sijin Cheng+65 6308 Suki Cooper+1 212 526 Miswin Mahesh+44 (0)20 7773 Nicholas Snowdon+1 212 526 Sudakshina Unnikrishnan+44 (0)20 7773 ,2,Barclays | Feeding the dragon,Base metals,Aluminium,Bauxite imports totalled 3.5Mt in December, down by 23% y/y owing to last years highbase effect. Uncer
11、tainty about Indonesias export ban in mid-2012 pushed Chinese buyersto front-load imports and seek alternative supplies from India and Australia, but signsindicate that Indonesia exports have largely stabilised as more export licenses were grantedin October. The country accounted for 2.3Mt of import
12、s, with full-year imports at 27.9Mt,down by 21% y/y from very high base levels in 2011. Chinese alumina imports droppedm/m to 387Kt in December but stayed close to the average monthly import of 418Kt,representing an increase of 93% y/y from low levels in December 2011. Primary aluminiumimports held
13、steady at 14.4Kt, but were down from the average of 49Kt per month inJanuary-October 2012, as the import arb collapsed in September. Primary exports fell to6.6Kt, and net imports were a small 7.8Kt.,Copper,China imported 238.8Kt of copper cathode in December, down from the 250.7Kt seen inNovember an
14、d continuing the trend of softer imports toward year end. A reduction infinancing demand due to tight credit situations and a deteriorating import ratio were likelybehind the drop in imports, in our view. Exports, in contrast, picked up to 25.5Kt from 21Kt inNovember, as stronger LME prices compared
15、 with Shanghai prompted smelters and tradersto take advantage of the export market. Net refined inflow fell to 213Kt, the lowest level sinceMay 2012. Domestic cathode production likely stayed strong after rising by 18.4% y/y inNovember, since concentrate imports again rose m/m to 935Kt a new record,
16、 up by 66%y/y and taking full-year imports to 7.8Mt, up by 22.5% y/y. We believe that Chinese tradetrends in 2013 will see continued strength in concentrate imports at the expense of netimports of cathode. We expect the Chinese refined copper import requirement to fall furtherthis year as more metal
17、 is produced at home (requiring more concentrate imports). Agrowing portion of this refined metal may also be exported from the country, which wouldweigh on LME copper prices, in our view. Scrap imports were range-bound at 443Kt takingtotal copper unit imports to 608Kt, the highest since September.,
18、Lead,Lead concentrate imports pulled back to 116Kt, down by 16% y/y, as much stronger LMEprices have made it unprofitable for smelters to import concentrate and then sell refinedlead in the Chinese market. Refined imports climbed modestly to 365t, but with exports alsopicking up to 445t, China becam
19、e a net exporter for the first time since March 2012,illustrating the sensitivity of trade flows to prices and also the surplus domestic market.Refined lead production has been very strong, while end-demand has softened leading to abuild in SHFE stocks to a record high of 99Kt.,Nickel,Refined nickel
20、 imports rose to 16.4Kt in December, while exports fell to 4.5Kt. The net importof 11.8Kt is around the average of 10.3Kt per month in 2012. Ore imports, on the other hand,surged by 72% y/y to a record high of 7.5Mt in December following Novembers record of6.8Mt. Decembers number was driven by a 95%
21、 y/y jump in imports from Indonesia. Theexport ban policy appears to have had little impact on Indonesias nickel ore exports with full-year imports from the country up by 31%. This suggests to us that ore supply could remainstrong enough this year to support a further increase in NPI production.,21
22、January 2013,3,Barclays | Feeding the dragon,Tin,China imported 2Kt of refined tin in December, down from 3Kt in November and down by42% y/y. The import arb collapsed in December and January, so we expect refined imports toremain weak in the next set of data also. Domestic Chinese tin prices have no
23、t kept up withthe latest rally in LME prices, suggesting that LME prices have dislocated from Chinesefundamentals. Exports, meanwhile, rose to 373t, cutting net imports to 1.65Kt and down by42% y/y. Concentrate imports rose to 3.1Kt, up from 2.7Kt in November.,Zinc,Chinas refined zinc imports jumped
24、 to 67Kt in December (24% y/y), owing likely to anincrease in financing demand, especially given the modest improvement in the import ratio.We highlighted the increase in financing-related imports into China in KeyRecommendations: Metals, 12 December 2012. We expect even more refined zinc to beimpor
25、ted into China in 2013, partly due to increased financing demand, especially sincesome Chinese provinces have clamped down on giving letters of credit for copper importsturning arbitrage traders to zinc instead. Concentrate imports were steady from last monthat 177Kt but were still down by 36% y/y.,
26、Energy commodities,Oil,Chinese crude oil imports were pegged at 5.58 mb/d in December (increasing by 8% y/y).This extends the growth trajectory seen since October, with Q4 averaging a growth of 8%y/y, marking a steady recovery when compared to the 7% y/y average decline seen overAugust and September
27、. Refinery runs also maintained a steady pace of growth in December(up 10% y/y) to a record 10.18 mb/d. The ramp up in run has been a result of several newrefineries coming online over Q4, in particular the 200 thousand b/d PetroChina refinery inSichuan and the 120 thousand b/d Shandong Dongming ref
28、inery.,Overall, the increased runs and robust crude and product import numbers place Chinese oildemand in December at a record 10.56 mb/d (up y/y by 9%, 866 thousand b/d). The latestreading completes a strong fourth quarter of demand growth for China where the headlinenumbers averaged 10.2 mb/d, wit
29、h growth during this period averaging 800 thousand b/d,8%). These growth indications show a stark reversal when compared with the trend seen inQ3, and a close to four fold increase in growth rates when compared to the rest of the yearwhere demand growth had averaged 235 thousand b/d (up 3% y/y). Fin
30、ally, in terms ofinventories, higher crude run requirements and relatively modest crude import growth havemeant that Chinese commercial crude oil inventories fell by 3.62% (7.9 mb) m/m to 212mb at the end of December.,However, product inventories built up in December by 4% m/m. Gasoline inventories
31、builtthe most, up by 8.5%, while gasoil stocks edged up by 2%. Kerosene inventories fell by 4%m/m, extending the constructive import readings for the product. The trade data continuesto show a marked increase in Chinese exports of refined oil products in December,indicating that all of the increase
32、in runs and crude imports cannot be proportionately linkedto growth in domestic consumption. Chinese oil product exports seasonally increase in Q4,but this time the swing has been a lot more pronounced. The expansion in refining capacityis also coinciding with the country increasingly ramping up sup
33、plies of refined products tothe regions key consumption centres.,Preliminary indications suggest that the cold weather conditions in December havesupported diesel demand in the country. Gasoline demand remains supported by structuralgrowth factors as the per capita usage of automobiles continues to
34、increase. Looking,21 January 2013,4,Barclays | Feeding the dragon,forward to this year, along with an improvement in petrochemical demand, we expectgasoline and diesel sales to support a healthy undercurrent of domestic consumption. Fueloil demand is likely to face headwinds this year as teapot refi
35、neries expand and obtain crudeoil import licenses, or merge with established parent companies and take advantage of theircrude import contracts as feedstock. Already, teapot refinery run rates in the Shandongprovince have reduced their processing rates to 42% of their capacity as of 17 January(down
36、by over 44% from a week earlier and the lowest level since August). While part of thereason for the decrease in run rates is to do with the increased flexibility in sourcing crude,part of it continues to be because of poor margins following the retail price cuts on 15November 2012 for both gasoline
37、and diesel.,Overall for crude oil, we expect healthy import growth, given: a) more refining capacitycoming online ( 450 thousand b/d); b) in addition to domestic product demand growth,product exports to regional consumption centres that also exhibit a strong growth portfolio;and c) a switch in appet
38、ite by teapot refineries from fuel oil to crude oil. Taking into accountall these factors, we expect crude oil demand growth to average 460 thousand b/d in 2013.,Coal,Chinas coal imports for December surged to a record 29mt, up by a significant 36% from21.4 mt last year. The colder-than-usual winter
39、 has led to a steep ramp-up in importsduring Q4, where seaborne volumes coming into the country increased by almost one fifthcompared with the same period last year. December capped off an exceptionally strongyear in which the country imported around 235 mt of coking and thermal coal, up by over28%
40、from 2011.,This steep increase in imports can, in large part, be attributed to the price attrition felt over2012. Compared with 2011, coal prices from the main suppliers to the worlds largest coalconsumer have dropped on average by 21%. For comparative purposes, coal averages forthese markers are as
41、 follows:, FOB Newcastle: $94.3/t in 2012 vs. $120.5/t in 2011 FOB Richards Bay: $93/t in 2012 vs. $116.2/t in 2011, Sub-bituminous Indonesian coal: $68.1/t in 2012 vs. $87.3/t in 2011,While imports stand at record high levels, 2012 exports have slowed dramatically. DespiteDecember holding up well a
42、t 0.82 mt, up by a modest 2% y/y, the rest of the year lagged2011 by a significant margin. In 2012, China exported just under 9.3 mt, which is the firsttime that the sub-10 mt level has been breached since 1987, and is the lowest in almost 27years, having experienced a 36.7% decrease from 2011.,In t
43、he near to medium term, we see imports subsiding slightly as we expect domestic coalprices to remain competitive, especially given the expectation that some smaller mines willbe adding further volumes once they resume operations following the National PeoplesCongress in March. This combination is li
44、kely to introduce a ceiling to the amount ofseaborne coal China may be interested in.,For a more in-depth analysis of the coal markets through to 2014, as well as our views,please see our recent report Coal & Freight Quarterly: 2014 Bring it on.,Natural gas,LNG imports are up y/y by 20.8% to 1.82 Mt
45、 on the back of increased heating demand overthe winter. This brings 2012s total imports to 14.68 mt (up 20% y/y), despite the cost perunit on average going up by 18%.,21 January 2013,5,Barclays | Feeding the dragon,Agriculture,The China Customs agricultural trade data for December was broadly posit
46、ive with only cornand wheat imports weaker on a m/m basis. Release of the December data meant the full setof 2012 trade data was available, which painted a strongly supportive picture overall forChinas agricultural import appetite with only cocoa imports down y/y. Notably, 2012 markeda record year o
47、f imports for soybeans and corn, and an eight year high for wheat imports.,Chinas corn imports continued their volatile trajectory. Imports fell by a third m/m inDecember to 265.8Kt and were down by 53% y/y. Meanwhile, corn exports more thandoubled m/m to 5Kt and were up by 148% y/y. This meant Chin
48、a stayed a net cornimporter at 261Kt marking the lowest level of net imports since May 2012. However, due tothe robust pace of imports through much of the year, full-year 2012 corn imports at5.21mn tonnes were up by 197% y/y. In a similar vein, Chinas wheat imports declinedfurther in December as well, dropping by 95% m/m and 97% y/y. Imports in Decemberwere 5.5Kt their weakest level since December 2010. However, quality concerns overChinas domestic crop supported wheat import demand for much of 2012, with full-yearimports up by 195% y/y at 3.7mn tonnes.,
