China's imports of commodities slowed to the lowest in months in October, as a week-long holiday closed factories, a weakening currency made foreign raw material more expensive and higher prices for products like crude oil hurt demand, analysts said.
Imports of copper by the world's top producer and consumer fell to their lowest since February 2015, extending a six-month decline as domestic prices remained at a discount to the international market amid plentiful supplies. Iron ore shipments slowed to their lowest since February as steel mills worked down inventories ahead of seasonally weaker demand during the colder months and curbed output due to soaring costs of raw materials like coke and coking coal.
Also, oil refineries bought their smallest volume of crude since the start of the year due to relatively high prices in recent months, and as strategic reserve tanks filled up. Year-on-year comparisons still showed a pick-up in buying and the declines to February lows - another holiday week in the Chinese calendar - indicate a seasonal blip. Even so analysts said the steady drop from earlier in the year suggests a weakening in consumption amid a global glut of supply. Lower exports of aluminium may also be due to lower demand abroad.
"It looks like seasonality plus weak demand," said Tracy Xian Liao, metals analyst at Citi, describing the metals data as "pretty bearish". China's total exports and imports were lower than expected, adding to the doubts about a pick up in economic activity in the world's second-largest economy. "I think currency depreciation is one factor that has discouraged (copper) imports," said Helen Lau, analyst at Argonaut Securities. Coal was an exception, with government-enforced mine closures expected to keep domestic supplies constrained and spur buying of foreign coal, potentially extending an historic price rally.
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