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China’s Industrial Sector Posts Large Profit Decline In October
China’s large industrial firms reported a 10 % Y/Y decline in profits in October, with the property and retail sectors hit the hardest, the National Bureau of Statistics in Beijing said on Wednesday. Total profits for the first 10 months of the current year fell 4.3% Y/Y to 5.87 trillion yuan (US$810.9 billion), worse than the 3.5 per cent drop recorded in the first nine months.
China’s oil and steel industries are deeply in the red: the cumulative losses in the world’s biggest steel industry hit 34 billion yuan (S$4.76 billion) over the first nine months of the year, whileChina’s oil refining sector saw losses deepen to 32 billion yuan ($4.5 billion) over the period.
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Weak oil demand by China has been playing a major role in the ongoing bearish sentiment in oil markets. Bloomberg estimates that total Chinese oil demand this year (Jan-Sep) is down -3.8% y/y to 13.99 million bpd.
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Meanwhile, steel mills have been forced to slash output in a bid to protect margins while oil refiners are also cutting runs, with the rapid adoption of electric vehicles disrupting oil demand.
China’s imports of unwrought copper climbed 6.8% in the first half of 2024 to 2.763 million tons, again surprising to the upside. However, June’s imports were 436,000 tons, down 15.2% from May’s 514,000 and the weakest since February. Weakening copper imports coincided with benchmark London copper prices climbing to a record high of $11,104.50 a ton on May 20.
Chinese copper buyers ramped up imports during the period of lower prices, but started pulling back when prices soared.
A similar trend was observed in the coal market, with China’s imports rising a strong 12.5% in the first half to 249.57 million tons thanks to seaborne thermal coal prices weakening.
Indonesian coal, a grade popular with Chinese utilities due to its higher energy density, ended at $52.70 a ton in July, nearly 10% lower in the year-to-date.
By Alex Kimani for Oilprice.com
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