China’s Commodities Output Roars Ahead as Economy Reopens
Yahoo Finance · 18 Apr 1.2K Views

(Bloomberg) -- China’s energy and commodities output roared ahead in March as producers rushed to feed a revival in economic activity.

The increases, which included records for a single month’s data for coal mining, natural gas output and oil refining, broadly tally with a robust set of import figures last week. But it’s clear that for many markets the additional supply is running ahead of actual consumption in what’s proving to be an uneven recovery. Underpinning the gains was a surge in power demand as electricity generation climbed 5.1% on year, according to the statistics bureau on Tuesday.

China’s reopening after the constraints of Covid Zero saw the economy grow 4.5% in the first quarter, handily beating expectations but short of Beijing’s 5% annual target. Property investment continued to contract, a warning sign given the sector’s importance to commodities markets. Retail sales in March shot higher while industrial production missed expectations.

The steel market in particular is heavily keyed to indications of building activity, especially ahead of the busy season for construction in the second quarter. Output in March rose 6.9% on year to 95.7 million tons, near a two-year high, although this is one of the markets where demand has so far disappointed.

Oil processing rose 8.8% to 63.3 million tons, an all-time high for a single month’s data, as refiners lifted runs to feed post-Covid transport demand, although a recent pullback in diesel consumption tied to trucking is another indicator of China’s patchy recovery.

China’s focus on energy security also saw coal miners raise output to record levels despite some short-lived disruptions from deadly accidents. Production increased 4.3% to 417 million tons. Natural gas output rose 4% to 20.5 billion cubic meters, a record for a single month, but a bit weaker than the daily average recorded in January-February’s combined figures when temperatures were colder. Crude oil drilling, meanwhile, topped 18 million tons for the first time since 2015.

Aluminum output rose 3% as smelters resumed production in southern provinces after local power shortages eased.

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