China’s imports of major commodities fell in May from the previous month, official customs data showed on Sunday, as companies scaled back on orders after robust shipments in the previous months caused a supply overhang.

Falling product prices on the back of sluggish demand have led loss-making companies, especially steel mills and crushers, to reduce orders, while increased scrutiny on commodities financing and tighter credit also weighed on import demand.

Daily crude imports fell 9.4 percent from the record high in April, while soybean arrivals dropped 8.2 percent from the preceding month, which was the highest this year.

Iron ore, coal and copper also fell, with the latter two commodities also hit by higher overseas prices.

“Stricter bank requirements for trade loans have dented import orders to some degree. High stocks and a poor import arbitrage also kept buyers away,” said Lian Zheng, a base metals analyst at Xinhu Futures.

Headline trade data showed overall exports gained steam in May on the back of a global economic recovery, but an unexpected 1.6 percent fall in total imports, versus a 0.8 percent rise in April, could signal weaker domestic demand.

The government is due to release industrial output, retail sales and fixed-asset investment on Friday.

CRUDE OIL

China, the world’s largest energy consumer, imported 26.08 million tonnes, or 6.14 million barrels per day (bpd) of crude oil in May, bringing total shipments in the first five months of this year to 128.7 million tonnes.

On a daily basis, crude imports of 6.14 million barrels per day (bpd) was 9.4 percent lower than the record high in April, as refineries cut production during the peak maintenance season.

PetroChina shut its largest 410,000-bpd Dalian refinery for maintenance from April 10 to late May, industry sources said.

China’s slackening economy, set to grow at its slowest pace in 23 years, has caused its oil demand to drop to a seven month low in April as refineries scaled back production for maintenance and continued to export surplus fuel.

However, analysts said imports should remain at elevated levels on the back of stockpiling in commercial storages or strategic reserves.

COPPER

Copper imports from the world’s top consumer fell 15.6 percent from a month ago to 380,000 tonnes in May. The figure includes anode, refined, alloy and semi-finished copper products.

High spot copper prices on the London Metal Exchange had prompted some end-users to delay buying spot metal in May, a purchasing manager at a large copper end-user said, while other traders said some firms were also unable to secure letters of credit for imports after banks stepped up lending requirements.

Going forward, imports could fall in the coming months as an investigation into possible fraud in metal financing in the port of Qingdao has led some major banks to suspend new metal financing to some Chinese customers.

The ongoing probe by authorities, which is to check against allegations that a company used single cargoes of metal multiple times to obtain financing, has rattled banks and trading houses.

IRON ORE, COAL, SOY

Iron ore imports stood at 77.38 million tonnes in May, down 7.2 percent from the previous month. Total imports in the first five months of 2014 was up 19 percent from year ago at 382.7 million tonnes.

Confronted by swollen inventories that are hovering near record of over 100 million tonnes and falling rebar prices that have lost 17 percent this year, mills and traders in China have slowed down fresh purchases of the raw material, causing iron ore prices to drop.

Traders said import credit tightening by Chinese banks and the rapid fall in iron ore prices in May forced many smaller iron ore traders to halt buying.

“People are waiting for prices to stabilise before they re-enter the market. But I think import demand in the near term is going to be affected by crackdown on commodity financing deals,” said an iron ore trader.

In a sign that slower domestic demand was pushing Chinese steel makers to push for more sales abroad, customs data showed steel products exports rose 7 percent in May from month ago to 8.07 million tonnes, while arrivals fell 6.2 percent.

Imports of coal, including lignite, dropped 11.4 percent in May from the preceding month to 24.01 million tonnes, as falling domestic prices made overseas supplies less attractive. Rising hydropower generation, along with sluggish economic growth, also led utilities to reduce orders.

Soybean imports to China, the world’s largest buyer, stood at 5.97 million tonnes in May, down 8.2 percent from 6.50 million tonnes in April.

Analysts said shipments could fall again in June, as a surge in imports since December has resulted in a severe supply glut and was hurting soy plants’ crushing margins.

“Crushing margins are likely to maintain negative for a relative long period as soy oil prices are pretty weak. We expect margins not to improve much in June,” said Li Lifeng, an analyst with an industry portal (www.cofeed.com).

Persistently high overseas soy bean prices had prompted some Chinese traders to default on April and May-delivery shipments, causing top seller Marubeni to divert some shipments to other destinations.