[BEIJING] China's iron ore imports surged to the second-highest on record in July as a stronger steel market drove demand for the raw material, but a drop in copper and crude oil purchases reflected slower demand in the world's top commodities buyer.
Low steel inventories had spurred a 31 per cent rally since late May in Chinese steel prices, pushing many mills to lift output and increasing the need for iron ore. Firm demand has helped iron ore rally 42 per cent this year, far outpacing price gains in copper and oil.
Shipments of iron ore to China climbed 2.7 per cent from a year ago and by 8.3 per cent from June to hit 88.4 million tonnes in July, data from the General Administration of Customs showed on Monday.
It was the second-highest monthly volume, only trumping the record 96.27 million tonnes reached in December 2015.
"I'm not really surprised because a lot of overseas suppliers wanted to increase their shipments to take advantage of the price recovery," said Helen Lau, an analyst with Argonaut Securities in Hong Kong.
"Imports should stay around these levels in the next few months unless the price increases to US$65 to US$70 which should encourage domestic output."
Iron ore stood at a three-month high of US$60.90 a tonne on Friday.
The increased iron ore shipments into China last month helped inflate stocks at its ports to the most since December 2014, but a decline in inventory on Friday suggests firm appetite among mills anticipating a seasonal pickup in steel demand starting from September.
Crude oil imports rose 1.2 per cent from a year ago to 31.07 million tonnes in July, or about 7.32 million barrels per day (bpd), the customs data showed.
On a daily basis, the volume was the lowest since January, and down from June's 7.45 million bpd, the second month that annual import growth had eased.
Amid weak domestic demand and a surplus in refined products, China's fuel exports rose to a record 4.57 million tonnes last month.
"Refiners are starting to tighten crude runs as well as increase exports to balance the surplus in the domestic market," said a Beijing-based trader who expects exports to remain strong throughout the third quarter.
Slower industrial demand also curbed copper imports, down 14.3 per cent from June to 360,000 tonnes. But shipments were still up 2.9 per cent from a year ago and total imports for January-July were up 19.5 per cent at 3.09 million tonnes.
Soybean purchases also dropped after hefty imports in the first quarter boosted domestic stocks. Shipments fell 18 per cent from a year ago to 7.76 million tonnes.