Posted on 08 Jun 2016
China's politically sensitive steel exports rose again in May while imports of iron ore posted a small increase, as the world's second largest economy delivered a mixed trade report for the month.
A pick-up in commodity prices helped overall imports fall by a much-less-than-expected 0.4 per cent in May. However, exports dropped 4.1 per cent, more than double April's decline and a bigger decrease than most analysts had forecast.
The trade surplus for the month was just under $US50 billion.
ANZ economist Raymond Yeung said the decline in exports was largely due to the depreciation of the Chinese yuan and, in real terms, the figure actually showed a small increase.
"May's export data is consistent with what we had observed from Taiwan on Tuesday," he said.
"We need to wait for a firmer recovery in the US and Europe for sustained positive growth in China's exports."
Mr Yeung expects imports to trend lower in coming months due to a tightening of credit by banks and other lenders.
Data from China's Customs Bureau showed steel exports topped 9.4 million tonnes in May, higher than the monthly average this year.
Over the first five months of the year China exported 46.28 million tonnes of steel, up 6.4 per cent compared to the same period in 2015.
A surge in China's steel exports over the past two years has flooded the global market and led to accusations of dumping being made against Beijing.
China's excess production has also been blamed for the collapse of Australian steel maker Arrium and the threatened closure of mills in Britain.
In retaliation, Australia, the European Union and the US have all levied anti-dumping tariffs on some Chinese steel products.
But while China has pledged to cut its over-production of steel there are few signs of this happening. Steel production has actually risen in recent months and is expected to touch a new record in May. But China's official government forecaster still expects steel production to decline by around 3 per cent this year to below 800 million tonnes.
China's coal imports, a major market for Australian producers, rose slightly to 19.03 million tonnes in May.
This compares to imports of 18.8 million tonnes in April, which was a 5.8 per cent fall compared to the same time last year.
In 2015, China's coal imports slumped 30 per cent to 204 million tonnes, as Australian producers battled import tariffs and an unpredictable inspection regime at Chinese ports.
China imported 86.75 million tonnes of iron ore in May, a small increase from April and the fourth highest monthly figure on record.
The May import figure was a 22.4 per cent rise from a year earlier.
The increased demand for imported iron ore reflects low cost producers in Australia and Brazil winning market share from their higher cost rivals in China.
But there are doubts whether the strong iron ore import numbers can continue as China has signalled it will move to rein in runaway credit growth later this year in an effort to begin the difficult task of restructuring its economy away from growth driven by property and infrastructure development.
