The Commodities Feed: China Iron Ore Imports Decline

Your daily roundup of commodity news and ING views

Iron ore processing at a plant in Brazil

Energy

ICE Brent has been trading marginally soft in the Asian morning trade today after hitting a six-month high of US$49.25/bbl on Friday following OPEC+'s agreement to extend the current output cut agreement, with a marginal relaxation of 500Mbbls/d starting January 2021. The ease in production cuts is smaller than originally planned and hence remains supportive for the oil market as it will continue to weigh on existing inventories. The ICE Brent forward curve continues to show a tight market in the short-term with the 1M/2M spread trading at a backwardation of US$0.06/bbl. The latest Commitment of Traders report shows that money managers remain bullish on crude oil, increasing their net longs in ICE Brent by 28,274 lots over the last week and leaving them with net longs of 245,864 lots. The increase in net longs was mainly driven by short-covering, with gross shorts falling by 22,489 lots over the week.

Saudi Arabia has increased oil prices for its Asian buyers as optimism around a vaccine and stronger imports from China helped the prospects for demand. Saudi Aramco has offered its Arab Light grade to Asian buyers at a premium of US$0.3/bbl for January delivery compared to a discount of US$0.5/bbl for December deliveries. Saudi Arabia has kept prices largely unchanged for North-West Europe for January deliveries while lowering prices for US buyers by around US$0.3/bbl as demand from the US remains soft (OIL).

Metals

On Monday, China released its latest trade data for November. Iron ore imports fell slightly to 98.15mt (-8.1% month-on-month) in November, but total imports during the first 11 months still rose by 10.9% year-on-year. Exports of steel products saw a moderate recovery of 4.4mt compared to 4mt in October. Copper concentrate imports grew to 1.83mt (19.88mt, -0.9%YoY) compared to 1.69mt in October. Imports of copper cathode and semi-finished products fell to 561.3kt last month compared to 618.1kt in October, while total imports year-to-date still grew by 38.7% YoY to 6.17mt. Unwrought aluminium and aluminium semis (JJU) imports came in at 424kt and total units of home appliances grew by 12.6% YoY. In the downstream demand sectors, exports of home appliance units grew by 11% in November while total exports had increased by 12.6% YoY during Jan-Nov. 

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