China is emerging a winner from the collapse in commodities prices to the lowest in 12 years as the world’s second-largest economy buys a record amount of raw materials.
Imports of crude, copper, iron ore and soybeans climbed to records in 2014 as prices tumbled, customs data showed today. The Bloomberg Commodity Index of 22 energy, agriculture and metal products slid to the lowest level since November 2002 yesterday after dropping 17 percent last year.
A rout in energy prices is leading commodities lower amid speculation supplies of raw materials from crude to copper are outpacing demand and as a stronger dollar diminishes their allure. China’s seeking to benefit by boosting purchases and filling its stockpiles even as economic growth slows.
“China is taking advantage of an extensive slump in raw material prices to purchase from overseas, which is especially reflected in oil and iron ore,” Guo Chaohui, a Beijing-based analyst with China International Capital Corp., said by phone. “Potential stockpiling may have triggered a buying spree in products like copper and soybeans.”
The Bloomberg Commodity Index extended losses today, sliding 0.4 percent to 101.4899 at 3:43 p.m. in Singapore. The measure tracks raw materials from London-traded Brent crude, the benchmark for more than half’s the world’s oil, to copper in New York and Kansas City wheat.
Oil Stockpiles
Brent tumbled 4.6 percent to $45.23 a barrel today, the lowest in almost six years, and is down 61 percent from a peak in June last year as the Organization of Petroleum Exporting Countries resists calls to trim output amid the highest U.S. production in more than three decades. U.S. benchmark West Texas Intermediate slid below $45 a barrel for the first time since April 2009.
China’s overseas oil purchases increased 9.5 percent to 310 million metric tons last year, according to the data released today. December purchases were at 30.4 million tons, also an all-time high. That’s about 7.19 million barrels a day.
China National United Oil Co., a unit of the country’s biggest energy company known as Chinaoil, bought 47 cargoes on a Singapore trading platform to be delivered last month, according to data from Platts, which operates the system. That’s the equivalent of 23.5 million barrels.
“Record cargoes bought by Chinaoil in October seemed to have been unloaded and are helping imports shoot to a record,” said Amy Sun, a Guangzhou-based analyst at ICIS-C1 Energy, a Shanghai-based commodities researcher. “Meanwhile, the government is taking advantage of low prices to stockpile both commercial and strategic oil.”
Major Avenue
China Petroleum & Chemical Corp. and China National Offshore Oil Corp. together may fill two storage projects in the nation’s second phase of building emergency stockpiles during the first half of this year.
“What you see across a lot of the commodities is that you have very strong supply growth globally and that China has been a major avenue where that supply is getting channeled,” Ivan Szpakowski, an analyst at Citigroup Inc. in Hong Kong, said in by phone. “Some of the buying in China is definitely opportunistic.”
Iron ore imports totaled 932.5 million tons last year from 820.3 million tons in 2013, the customs data show. Shipments in December climbed 29 percent to 86.85 million tons from the month before. The steel-making ingredient collapsed 47 percent in 2014 as BHP Billiton Ltd., Rio Tinto Group and Vale SA raised low-cost production in Australia and Brazil, spurring a global glut.