China’s robust crude demand has been supported by independent refiners, also known as teapots, that have been receiving import quotas from Beijing over the past nine months.
While that partially explains the ugly import decline registered in February, it offers little explanation as to why demand for Chinese exports – off a whopping 25.4% over the past year – remains worryingly weak.
While yearly changes of China’s trade data are usually distorted by the Chinese New Year, exports fell 12.6% on average in the first two months of the year, compared with a drop of 1.7% in the fourth quarter, suggesting that China’s external profile has worsened, says a research report by ANZ.
Like crude, the nation’s iron ore imports also hit a record high in the year to February, rising to 962.6 million tonnes. “So the implication is that we’ll probably see a significant reversal and a stronger number next month”, said Julian Evans-Prichard, China Economist at Capital Economics in Singapore.
Analysts polled by the Reuters news agency had expected exports to fall by about 12.5 per cent last month.
Commerce Minister Gao Hucheng said last month that he was confident that China’s trade conditions would stabilise and improve in 2016.
At the annual meeting of China’s national legislature this week, the leadership refrained from announcing a trade growth target after last year’s exports contracted by 2.8 percent, falling embarrassingly short of the official goal of 6 percent growth.
As exports declined faster than imports, the trade surplus narrowed to RMB209.5 billion (US$32.6 billion) in February.
The country’s top energy group state-owned China National Petroleum Corporation (CNPC) forecast in January that the China’s net crude imports would rise 7.3 percent this year.