Chinese imports of copper and iron ore likely fell in December from the month before due to a cash crunch and as growth momentum slowed, but shipments of crude oil are expected to have risen as some refineries restarted after maintenance.
Following a strong economic recovery in the third quarter and through to early November, growth in the world's top commodity buyer has begun to slow, with two manufacturing surveys showing factory activity slipped in December.
A liquidity crunch, engineered by the People's Bank of China as it pushes banks to improve their asset and liability structures, also crimped restocking and import demand for a slew of commodities.
Preliminary trade data is due on Thursday at 10 a.m. local time (0200 GMT). Numbers on fourth-quarter and 2013 GDP, December retail sales and industrial output are expected on Jan. 20.
China has also been facing external headwinds, with trade growth in 2013 set to miss an annual target of 8 percent, according to an estimate given late last month by Commerce Minister Gao Hucheng.
CRUDE OIL
China's crude oil imports are expected to rise in December on higher crude runs as two major refineries, owned by Sinopec and PetroChina, came back online in late November after planned overhauls, according to energy consultancy ICIS C1 Energy.
A steady fall in crude oil inventories would have encouraged refiners to step up imports, traders said, adding that a fifth month of declines in fuel stocks would also prompt refiners to increase crude runs.
Still, the rise in imports could be capped by a blast in a Sinopec oil pipeline in late November. The explosion forced the firm to reduce its imports of Angolan crude after local authorities temporarily shut a major oil terminal in the eastern port of Qingdao.
Month Nov Oct Sept Aug
Volume (mln T) 23.56 20.41 25.68 21.43
Volume (bpd) 5.73 4.81 6.25 5.05
COPPER
Arrivals of copper likely fell in December, hit by weaker winter demand from end-users and by the liquidity crunch that pushed benchmark money market rates to a six-month high.
Reduced lending by local banks has dented copper sales in the domestic market, in turn hurting demand for fresh imports, traders said.
"Physical demand has been quite weak because of the cash crunch and copper stocks at bonded warehouses have begun to climb," said Che Hongyun, an analyst at Galaxy Futures.
Contracted shipments, however, should have kept arrivals reasonably strong, traders said.
Shipments of anode, refined copper, alloy and semi-finished copper products reached 435,613 tonnes in November 2013, up 7.1 percent from a month earlier.
Month Nov Oct Sept Aug
Volume (tonnes) 435,613 406,708 457,847 387,564
IRON ORE
Similarly, traders expect iron ore imports to have dropped in December from the previous month's record-high as reduced bank lending and higher borrowing rates squeezed steel mills.
Traders said some mills and traders were facing such a severe cash crunch that they had to sell their iron ore inventories at a loss to improve cash flows.
Weaker steel demand during the winter months, twinned with lower steel prices, has also prompted mills to cut production, in turn slowing their consumption of the raw material.
Traders said imports likely fell below 70 million tonnes in December, after hitting a record high of 77.84 million tonnes in November.
Despite the monthly decline, China's iron ore imports are on track to have risen more than 11 percent in 2013 to a record of over 800 million tonnes. The steel association has forecast 2014 imports would hit a fresh record of 850 million tonnes.
Month Nov Oct Sept Aug
Volume (mln T) 77.84 67.83 74.58 69.01
SOY
China's soy imports likely marked a five-month peak of between 6.65-7 million tonnes in December, up from 6 million tonnes in November as crushers raised production.
That figure for December would bring China's 2013 full-year soy imports to a record 60 million tonnes.
"The actual crushing volume (in December) was about 7 million tonnes. Soymeal prices have stayed strong since the second half of the year. That would have given good crushing margins for soy plants and boosted their soy imports," said Li Lifeng, senior analyst with industry portal www.cofeed.com.