Markets often look to data such as China’s imports of major commodities to discern clear trends about the state of the world’s second-biggest economy.

But July’s trade data provides little in the way of clarity, rather giving ammunition to both the case for an economy that is resilient and recovering, and one that is struggling for momentum.

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Crude oil is a case in point.

The world’s top importer, China received arrivals of 11.11 million barrels per day (bpd) in July, according to calculations based on official data released on Thursday.

On the bullish side of the ledger, this was up 11.5%, or 1.14 million bpd, from the 9.97 million bpd of July last year.

But if a bearish view is sought, July’s imports were down 5.4%, or 1.03 million bpd, from June’s 12.14 million bpd, and were also the weakest since January.

What is often ignored in discussions about the relative strength or weakness of commodity imports is the role of prices.

China has shifted in recent years to become a far more price-sensitive buyer of commodities, adopting a tactic of raising imports and lifting inventories when prices are deemed low, and trimming purchases when they rise too high or too soon.

China’s crude oil imports were weak in the first quarter of this year, as arriving cargoes would have been arranged when prices were in an uptrend, with Brent futures reaching a high so far this year of $82.63 a barrel on January 15.

But oil imports rose in the second quarter as prices trended lower, with Brent dropping below $60 a barrel briefly in both April and May.

Since then prices have been trending higher, with increased volatility from geopolitical events such as Israel’s June conflict with Iran and threats to Russian supplies from U.S. President Donald Trump and the European Union.

The higher prices are likely to make Chinese refiners cautious and some easing in imports is likely.

Perhaps the best indicator of the state of China’s demand for crude is the year-to-date imports, which are up a modest 2.8%, to the equivalent of 11.25 million bpd.

It is also worth noting that China’s domestic crude output rose 1.3% in the first half of the year, and that increasing electrification of the vehicle fleet is cutting gasoline demand.

The overall picture for crude oil demand in China is one that is neither robust or weak.

IRON ORE, COPPER
The same can be said of several other major commodities.

Iron ore imports of 104.62 million metric tons in July were down 1.3% from June but up 1.8% from July last year.

For the first seven months imports of the key raw material for making steel were down 2.3% at 696.57 million tons, a figure that fits with the small decline in steel production seen in the first half.

Imports of unwrought copper recovered in July to 480,000 tons, up 3.5% from June and 9.6% from July 2024, but they are still down 2.6% for the first seven months of the year.

This largely reflects the influence of uncertainty over U.S. tariffs on copper imports, which drew copper away from China to the United States in the first half.

But this trade is likely to reverse as Trump backed off imposing his 50% tariff on imports of refined copper, limiting it only to certain types of copper products.

With U.S. imports likely to decline in the second half as stockpiles are used up, Chinese copper buyers will get the opportunity to import more.

Coal imports managed a small increase in July, with arrivals of 35.61 million tons, up slightly from June’s 33.04 million, but down 23% from July last year.

For the first seven months of the year, China’s coal imports have slumped 13% as rising domestic output and lower coal-fired electricity generation cut the need for imports.
Source: Reuters