June 5, 2013 / 10:11 AM / 6 years ago

UPDATE 2-China April gold imports fall from record, but rebound seen

* Total April gold imports from HK 125.72 T vs March’s 223.52 T

* Hong Kong gold premiums ease from recent peak

* China data comes after India said gold imports jumped in May (Adds comments from Chow Tai Fook and analysts)

By A. Ananthalakshmi and Manolo Serapio Jr

SINGAPORE, June 5 (Reuters) - China’s gold imports unexpectedly tumbled in April from record levels on supply constraints as demand surged after global prices hit two-year lows, although a recovery is likely in May.

Premiums for gold bars in Asia, from Singapore to Hong Kong, hit record highs last month as buyers scrambled to buy bullion, leading to a supply shortage. Gold dealers in Asia have had to take orders to be delivered at a later date, creating a backlog.

However, demand has cooled off somewhat from peak April levels, easing the supply crunch and prompting some analysts to expect a rebound in Chinese imports.

China, the world’s No. 2 gold consumer after India, does not publish gold trade data. The numbers from Hong Kong - a main conduit for gold into the mainland - help gauge China’s trade of the precious metal.

The country’s total gold imports from Hong Kong fell 44 percent to 125.715 tonnes in April from an all-time high of 223.519 tonnes in March, according to data from the Hong Kong Census and Statistics Department. (www.censtatd.gov)

“I would have expected a stronger number, but that is difficult when not enough gold is available. Hence, May should see a stronger reading again,” said Carsten Fritsch, analyst at Commerzbank.

Net gold flow - which excludes imports by the former British colony from China - reached 80.101 tonnes, down from 136.185 tonnes in March.

Premiums for gold bars in Hong Kong surged to a record $6 an ounce over spot London prices in May.

“It is a surprise. Prices had fallen in April but there was not much supply at that time, maybe that’s why imports have fallen. Premiums were sky high at that time,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Hong Kong gold premiums remain high at around $4-$5 an ounce, suggesting firm demand.

The Chinese data comes a day after India said its gold imports soared further in May despite government curbs.

Strong physical demand from Asia has helped international gold prices recover 6 percent from a two-year low of around $1,321 an ounce in April. Prices are still about $300 an ounce below this year’s peak.

BRISK SALES

Daily flow of customers at Hong Kong-based Chow Tai Fook , the world’s largest jewellery retailer by market value, rose by 30-40 percent in April, said a spokeswoman for the company.

“In the long run, we are optimistic about demand for gold jewellery as it is a Chinese tradition to buy gold jewellery for festive or celebratory occasions,” she said.

China produced 403 tonnes of gold in 2012, but consumption was more than double at 832.2 tonnes.

More and more Chinese are also buying gold when they travel overseas, an indication that the latest imports data is “not an accurate representation of the true demand in China”, said Joyce Liu, analyst at Phillip Futures in Singapore.

China’s gold market is tightly controlled, with import licenses granted to a handful of banks and export permits given only to authorised jewellery makers.

But Beijing’s efforts to curb lending to commodities firms including gold importers could weigh on imports going forward. As part of efforts to rein in currency speculation, Chinese gold importers are struggling to secure trade loans.

After China’s imports recover in May, the pace may slow down significantly for the rest of the year, said Chen Min, precious metals analyst at Jinrui Futures in Shenzhen.

“When gold prices plummeted to two-year lows in April, lots of implicit need was motivated, partly from demand in September and October, a wedding season in China, reducing demand for the rest of the year,” Chen said. (Editing by Muralikumar Anantharaman)

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