China’s Demand for Commodities Return

Chinese demand for a wide range of commodities has been surprisingly strong this year despite worsening economic data, raising questions over how long the demand recovery can last.

For the first three months of the year, oil demand grew an annual 7.7 percent, its biggest gain in over two years while March iron ore imports soared 18.5 percent on month, snapping a two-month run of declines. Imports of refined copper metal rose to a four-month high last month, building on an 11.4 percent gain in copper consumption in February. And in the precious metals sector, March platinum imports jumped 26 percent on year, hitting their highest since December 2013.

The spike in demand seems at odds with recent growth indicators. Manufacturing activity in March remain in contraction territory while April’s figure fell to a one-year low, according to HSBC’s preliminary purchasing manager’s index (PMI) survey. Meanwhile, industrial production logged its worst performance in March since the global financial crisis and first-quarter gross domestic product hit a six-year low.