June 22, 2011


China's key imports grow; signs of slowdown emerge


Key Chinese imports, notably corn, surged in May due to sector-specific factors, but a slump among other important commodities including edible oils and wheat signalled concerns over a macroeconomic slowdown, customs data showed Tuesday (Jun 21).


The mixed picture sounded a note of caution, coming after a much-heralded expansion in overall imports last month.


Softer global prices in March and April triggered dip-buying among Chinese traders of key commodities.


China's corn imports in May more than doubled from a year earlier, rising 146% to 12,010 tonnes, the General Administration of Customs said. Imports surged 66% from April. The increase in China's overall imports was first indicated in preliminary data issued by the customs administration two weeks ago.


The increase in corn shipments was due to China Grain Reserves Corp, the state grain stockpile agency, purchasing one million tonnes of US corn in March. The first shipments began to arrive last month.


The customs data also showed that China may be moving to diversify its sources of foreign corn. About three quarters of May's corn shipments came from Myanmar - a volume more than double all of Myanmar's corn exports to China in 2010.


Total corn imports from January to May rose 3.2% to 24,442 tonnes, the data showed.


Customs confirmed Tuesday that soy and sugar imports also rose strongly in May, as Chinese buyers seized on a spell of weaker global prices.


Still, not all commodity imports were stronger. Shipments of soyoil dwindled to a tiny fraction of their year-ago levels, decreasing almost 100%, while palm oil imports were down 6% as government measures to enforce low cooking-oil prices kept domestic supplies ample and cut into trading appetites.


"The pick-up in imports... need[s] to be interpreted with care," analysts said. They added that the headline import growth figures were based on value, which was driven by a period of high commodity prices earlier this year, while in volume terms, imports were still below the average in the first quarter.


Signs remained that macroeconomic policy tightening has bitten into some key areas of consumption.


Wheat imports were notably soft, falling 95% on-year to 10,308 tonnes, as expectations for a robust Chinese summer grain harvest continued to ride high.


Cotton imports fell 27% on-year, driven by high domestic private-sector inventories and a sharp fall in domestic prices.


With the tightening cycle is unlikely to end soon, analysts said the jury remains out on whether the Chinese slowdown has run its course.

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