China wins from oil, commodity slump as collapse spurs record imports

Beijing (Bloomberg) - China is emerging a winner from the collapse in commodities prices to the lowest in 12 years as the world's second-largest economy buys a record amount of raw materials.

Imports of crude, copper, iron ore and soybeans climbed to records in 2014 as prices tumbled, customs data showed on Tuesday. The Bloomberg Commodity Index of 22 energy, agriculture and metal products slid to the lowest level since November 2002 yesterday, after dropping 17 per cent last year.

A rout in energy prices is leading commodities lower amid speculation supplies of raw materials from crude to copper are outpacing demand and as a stronger US dollar diminishes their allure. China is seeking to benefit by boosting purchases and filling its stockpiles even as economic growth slows.

"China is taking advantage of an extensive slump in raw material prices to purchase from overseas, which is especially reflected in oil and iron ore," said Guo Chaohui, a Beijing-based analyst with China International Capital Corp. "Potential stockpiling may have triggered a buying spree in products like copper and soybeans."

The Bloomberg Commodity Index slid 0.6 per cent to 101.2909 on Tuesday. The measure tracks the prices of raw materials from London-traded Brent crude, the benchmark for more than half's the world's oil, to copper in New York and Kansas City wheat.

Brent fell 0.5 per cent to US$46.34 a barrel on Wednesday, after touching the lowest level in almost six years on Tuesday. It is down 60 per cent from a peak in June last year as the Organization of Petroleum Exporting Countries resists calls to trim output amid the highest U.S. production in more than three decades. U.S. benchmark West Texas Intermediate slid below US$45 a barrel for the first time since April 2009 on Tuesday.

China's overseas oil purchases increased 9.5 per cent to 310 million metric tons last year, according to the data released yesterday. December purchases were at 30.4 million tons, also an all-time high. That's about 7.19 million barrels a day.

China National United Oil Co., a unit of the country's biggest energy company known as Chinaoil, bought 47 cargoes on a Singapore trading platform to be delivered last month, according to data from Platts, which operates the system. That's the equivalent of 23.5 million barrels.

China's gross domestic product climbed 7.4 per cent last year, the slowest expansion since 1990, economists project.

"It's not the case that underlying demand in China has been great and that's led to them wanting to buy a huge amount more," said Ivan Szpakowski, an analyst at Citigroup in Hong Kong. "It's more a reflection of excess supply, prices are lower."

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