Commodity producers worried about the outlook for Chinese demand have another reason to fret, with the relationship between pricing and import volumes appearing to break down.

China’s imports of crude oil, iron ore and coal have followed a fairly consistent pattern since the 2008 global recession, rising when prices decline and moderating when they increase.

But this year has seen an almost complete breakdown of this inverse correlation for coal, and what may be the start of a similar process for iron ore and crude oil.

The conventional wisdom in the coal industry up until this year was that once it became clear the market was oversupplied, the best option for miners was to push for export volumes while trying to lower operating costs.

The theory was that if the coal was cheap enough, China, the world’s biggest importer, would soak up the extra volume, allowing for economies of scale and ultimately survival in what had become a structurally low-price environment.

This worked quite well, with coal imports rising in tandem with price declines.

When the price of spot thermal coal at Australia’s Newcastle port, an Asian benchmark, starting dropping from its post-2008 high of $136.30 a tonne in January 2011, Chinese buying jumped.

Coal imports rose from 6.76 million tonnes in February 2011 to 35.1 million in December 2012.

The Newcastle price was down to about $86 a tonne by the end of last year and Chinese coal imports reached a record 35.9 million tonnes in January this year.

However, since then, coal imports have been dropping steadily, falling to 18.86 million tonnes in August, the lowest since September 2012.

This decline has happened despite the continued slump in prices, with Newcastle coal dropping to $67.45 a tonne in the week to Sept. 5, a four-year low.

IRON ORE ON THE SAME PATH?

Iron ore may be starting to experience the same sort of dynamic as coal, with a slump in prices failing to provoke increased import demand by China, which buys about two-thirds of global seaborne supplies.

Asian spot iron ore .IO62-CNI=SI hit its post-2008 peak of $191.90 a tonne in February 2011 and Chinese imports dropped to 48.8 million tonnes the same month.

As the price trended lower, imports surged, reaching 70.9 million tonnes in December 2012, three months after prices hit a three-year low in September of that year.

The price continued to slide and imports reached a record 86.83 million tonnes in January this year. But even though the price is still going down, imports have trended lower.

Iron ore dropped to $83.60 a tonne on Sept. 5, a four-year low, taking the decline for the year to 38 percent.

It’s perhaps too early to say a definitive trend has started in iron ore, but the similarities to coal are present.

Like coal, the global iron ore market is now substantially oversupplied and growth in Chinese demand is moderating as the economy slows and it transitions to being more consumer-led from dependence on commodity-intensive fixed-asset investment.

Still, iron ore imports rose 16.9 percent in the year to August over the same period in 2013, so it remains the case that demand growth is strong, so far at least.

What happens over the rest of the year will be key to see if iron ore is travelling the same path as coal.

While imports may rebound in September, with one trading source saying there has been a strong uptick in charters to China, they are likely to moderate again in October, given a week-long holiday that month.

What will be important is to not get caught up in the monthly swings in imports and focus on the overall trend.

If prices continue to weaken, and imports don’t show strong growth in response, then iron ore may well be in the same basket as coal.

Even crude oil is showing signs of a similar pattern, despite Chinese imports accounting for only about 7 percent of global consumption.

Crude imports have trended lower this year after reaching a record 28.15 million tonnes in January, with the lower Brent price since the mid-June high for the year above $115 a barrel failing to spark a strong rebound in demand.

Again, it’s too early to call a definitive trend, but it may be a sign that Chinese oil imports will no longer automatically increase when the price declines.

What appears to be the case is that China’s imports of commodities are becoming more closely aligned to its actual consumption.

This means that price declines won’t necessarily result in increased imports, although price increases may well lead to lower imports – the worst of both worlds for producers.