Updated about 4 hours agoMon 8 Sep 2014, 3:38pm
China’s record trade surplus is bad news for Australian miners, with commodity imports falling.
Australia’s biggest trading partner booked a surplus of just shy of $US50 billion in August, a record balance.
However, that is bad news for resources exporters as China’s surplus came not only from a 9.4 per cent annual rise in exports, but also a 2.4 per cent slide in imports.
Of particular relevance to Australia, iron ore exports dropped 9.3 per cent in August compared with July, although they remain 16.9 per cent up for the year to date.
That fall in imports was both exacerbated by, and a cause of, a steep decline in iron ore prices last month, which has continued so far in September with the benchmark Chinese spot price hitting a fresh five-year low of $US83.60 a tonne.
The news for coal was even more bleak, with an 18.1 per cent slump in imports between July and August, while imports are down 5.3 per cent over the year so far.
A key benchmark price for Australia thermal coal, used for power generation, has fallen more than 20 per cent this year.
Both iron ore and coal prices are now less than half their post financial crisis peaks.
Capital Economics analyst Julian Evans-Pritchard says a property market slowdown is starting to reduce demand for building materials such as steel, reducing iron ore prices, but lower iron ore prices have also weighed on the value of imports.
“Slower import growth reflects cooling investment, particularly in the property sector, which has weighed on commodity demand,” he told Reuters.
“That said, the weakness in commodity imports has also been magnified by the sharp falls in commodity prices in recent months.”
Mr Evans-Pritchard does not expect that situation to change soon, however other analysts are hopeful that China will introduce some stimulus to maintain growth near its 7.5 per cent target.
“It’s an interesting set of numbers for policymakers: it calls for more policy easing but, at the same time, strong exports and a record surplus will put some pressure on policymakers to let the currency rise in some way or the other,” Hong Kong-based RBS economist Louis Kuijs told Reuters.