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China ramps up commodity exports as domestic glut grows

[BEIJING] Chinese commodity producers struggling with excess output and hurt by sinking prices looked abroad at a record rate last month to find markets for products including aluminium, refined fuels and steel, data showed on Tuesday.

China's refineries shipped a record amount of fuel products, aluminium processors sold their second-highest tonnage of product and steelmakers increased exports by 22 per cent to 102 million tonnes in the January-November period, setting a new record, according to preliminary customs data.

The numbers will likely increase concerns that the world's No 2 economy is exporting its excess output onto a saturated global market, accelerating the rout in prices. "We think it's a longer term dynamic playing out: China exporting its surplus to the Western world," said Daniel Hynes, analyst at ANZ, referring to the 15 per cent surge in unwrought aluminium and product exports to 450,000 tonnes in November.

That's equal to June levels and the second highest after December 2014.

Analysts expect China's exports to remain firm as producers try to mitigate weak domestic markets, although the pace may slow as smelters curtail output due to low prices. Citigroup said some 1.6 million tonnes of annual capacity has closed since October.

Still, the data will likely raise tensions with the US industry, which has criticized China, the world's top producer, for flooding the global market with product, adding to bulging stockpiles and hurting prices.

Mid-sized producer Century Aluminum Co is considering launching a lawsuit against China's exports.

In the oil market, China sold a whoppping 4.1 million tonnes of refined products overseas last month after Beijing relaxed restrictions on export permits in the face of weak demand and elevated inventories.

That's a jump of 68 per cent year-on-year, surpassing 1 million barrels per day. Citigroup analysts said they expect diesel exports of 270,000 barrels per day.

Last month, the government allowed for the first time independent refiners, known as teapots, and state-run Sinochem to export refined fuel products just months after issuing them permits for the first time to import crude oil.

European and US steelmakers have criticised China's stricken steel industry for years for selling its unwanted rebar overseas as domestic demand wanes, although Beijing has denied it is deliberately dumping surplus output.

Concerns have also been raised about government rebates offered to steel makers who add alloy elements, allowing them to undercut competitors.

The final data will be released on Dec 21.