Driven by economic growth and a need to restock, China's imports for crude oil and key commodities surged to a record high in the first month of the year.
Imports of crude oil, iron ore and copper are often evaluated as a sign of China's economic strength, but a weeklong Lunar New Year holiday, which began on Jan 31, can affect the market to certain extent when manufacturers increase their inventories for production during the holiday.
China imported 28.16 million metric tons of crude oil in January, up 11.9 percent year-on-year. The daily crude imports reached a new record of 6.63 million barrels, according to data released by the General Administration of Customs on Wednesday.
Li Li, research director at ICIS C1 Energy, a Shanghai-based energy information consultancy, said international crude oil prices hit bottom in November 2013, which gave traders and refineries the opportunity to restock at a good price before the Lunar New Year.
Analysts said the major drive for China's crude imports this year and the next is to build up medium- and long-term commercial and strategic reserves, creating a saturated supply in the domestic oil products market.
"The demand for crude oil from the new refining capacity is relatively low," she said.
Iron ore imports also soared to a record high of 86.83 million tons in January, up 18 percent compared with December, marking a 33 percent increase year-on-year.
"It's a reasonable growth rate," said Zhang Tieshan, a senior analyst from industrial information provider Mysteel.com.
Many domestic steel mills were restocking ahead of the Lunar New Year holiday, when trading is usually suspended, he said.
"The Chinese government opened iron ore import rights to private companies during the second half of last year, which also contributed to rising imports," said Zhang. "Compared with the same period last year, there are more importers for iron ore at the beginning of this year."
The growth of iron ore imports exceeded market expectations. In fact, analysts believed China, as the biggest iron ore user in the world, would see imports decline at the beginning of the year.
"China's cut in steel production capacity has not had a big effect on iron ore imports. Meanwhile, the influence of environmental policies on steel mill production and iron ore demand is regional," said Zhang.
Late last year, the Chinese government announced a cut of 80 million metric tons of steel production capacity in order to improve the industrial structure and fight air pollution.
Big steel producers such as those in Hebei province are affected by the policy, but it did not have a nationwide impact, said Zhang.
He predicted that the country's economic growth will continue to decline in the second and third quarters, which will result in slower iron ore imports growth in the following months.
China's crude steel output will grow at 3 percent to 4 percent year-on-year in 2014, estimated analysts at Mysteel.
In addition to iron ore, copper imports in January totaled 536,000 metric tons, a record high with a year-on-year growth of 53 percent. The figure grew 22 percent, compared with the previous month. Analysts said the soaring increase was also caused by unexpected strength in restocking demand ahead of the Lunar New Year.
Generally, China's imports in January increased 10 percent to $175.27 billion, the fastest pace in six months, while exports grew 10.6 percent to $207.13 billion.
The stronger trading growth has eased worries about China's economic slowdown, though most analysts believe that the trade growth in February will experience a slight slowdown.
