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Oil Report

China commodity imports soar despite high costs

* China’s March copper, oil imports maintain strong growth

* For a table of imports and exports, click [ID:nTOE63900I]

BEIJING, April 10 (Reuters) - China’s strong demand for oil and copper showed no let-up in March, with imports rising rapidly despite higher prices as factories returned to work in earnest after the long Lunar New Year holidays.

Purchases of other commodities, such as alumina, iron ore, steel, and rubber also rose robustly, while imports of unwrought aluminium, coke and corn slowed from the previous year’s levels, according to official data released on Saturday.

Crude oil imports jumped to their second-highest monthly level on record of 4.95 million barrels per day after China brought on line at least two big crude units late last year, partly to supply feedstock for petrochemical complexes.

The import total was 2.5 percent higher than in February on a daily basis and just a touch below the record high of 5.01 million bpd in December. On a monthly basis, March imports of crude were 13.8 percent higher than in February.

“As long as the government doesn’t wait too long to raise retail fuel prices, China’s crude imports will remain high in the upcoming months as oil firms still have a strong incentive to produce,” said Qiu Xiaofeng, an oil analyst at China Merchant Securities in Shanghai.

After completing maintenance work, China’s top oil refineries plan to raise crude throughput to a new peak this month to meet rising domestic fuel demand while awaiting the first fuel price increase since November. [ID:nTOE636080]

China was in its customary position as a net importer of oil products in March. It had been a net exporter in December and January as it offloaded massive inventories of gasoline and diesel.

Fuel exports soared 65 percent in March over the previous month, while imports grew 11.4 percent, more than halving net imports from February levels, giving more room for refiners to release their ample stocks of refined products onto the domestic market.

In late March, oil prices CLc1 broke through $80 a barrel, where it had been hovering for five months, fueling speculation that China might raise retail fuel prices very soon.

ROBUST COPPER DEMAND

Imports of unwrought and semi-finished copper surged 41.6 percent on the month, surpassing estimates by traders and analysts for the second straight month and reflecting strong term and financing inflows to the world’s top consumer of the metal.

The imports, including anode, refined, alloy and semi-finished products, stood at 456,240 tonnes in March, much higher than the estimate of flat to lower from the previous month’s 322,282 tonnes due to reduced margins.

But some had noted that demand for refined copper, the most popular type in international and Chinese markets, had not been too bad in Shanghai and supply of the metal had not fallen last month.

Jing Chuan, chief researcher at Great Wall Futures, said this week that the availability of bank loans for copper imports had remained sufficient in China, keeping strong demand for financing purposes. [ID:nTOE63606L]

Customs will release refined copper figures in late April.

Traders said importers were storing some contracted arrivals of refined copper in March in bonded warehouses as they were reluctant to sell the metal at lower domestic prices.

Traders estimated copper in bonded warehouses in Shanghai to be near 200,000 tonnes in early April, twice February’s level.

China recorded a $7.24 billion trade deficit in March, the first gap since April 2004, with exports jumping 24.3 percent from a year earlier while imports surging 66.0 percent.

“The rare trade deficit was mainly due to high prices for commodity imports last month. This will not last for long and, overall, China will remain a net merchandise exporter,” a researcher at the Commerce Ministry said.

Almost all major commodity imports enjoyed robust growth in March; only a few looked lacklustre.

Imports of unwrought aluminium, used in construction and cars, fell 35.4 percent from a year earlier, but imports of aluminium scrap and alumina both soared. (Reporting by Eadie Chen and Poly Yam, Editing by Alan Wheatley) (eadie.chen@reuters.com; +8610 6627 1268; Reuters Messaging: eadie.chen.reuters.com@reuters.net))

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