China Nov commodities output weak as refinery runs hit record

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Beijing | Published: December 12, 2015 3:41:08 PM

China's output of key industrial commodities including coal and steel remained weak in November amid chronic oversupply as slowing construction demand took its toll.

China’s output of key industrial commodities including coal and steel remained weak in November amid chronic oversupply as slowing construction demand took its toll.

The world’s second-biggest economy has been hit by weak demand at home and abroad, factory overcapacity and challenges posed by its transition to a consumption-led growth model from one reliant on investments.

Analysts see further slowing of the economy in 2016, from the government’s targetted 7 percent growth for this year, which would be the slowest in a quarter of a century.

“Chinese demand is likely to disappoint. Our house view is for slowing growth in 2016, and importantly the mix is moving further towards less commodity-intensive services sectors,” analysts with ANZ Research said in a commodities note on Friday.

Crude steel output continued to drop, falling 1.6 percent year-on-year to 63.32 million tonnes in November, which also triggered a 7.8 percent drop in the output of coking coal, a key steel-making material.

Raw coal output, which has been falling as a result of government measures to promote cleaner burning fuels, also dropped 2.7 percent from the same month a year-ago, according to data published by the National Bureau of Statistics on Saturday.

A flurry of stimulus measures over the past year has failed to restore momentum to a fragile economic recovery, but other data on Saturday pointed to signs of stabilisation. Property investment growth fell to the lowest level since early 2009 in November, but factory output growth beat forecasts, and retail sales were also up.

Coal production was down 3.7 percent for the eleven months, hit by a 1.5 percent decline in thermal power production over the period as grids took on more hydropower.

As colder weather arrived, output of natural gas, which is used in heating, rose 0.2 percent on year in November, and was up 2.6 percent in the first eleven months, down from 6.9 percent growth in 2014.

Crude oil throughput hit a new record as refiners continued to take advantage of weak global prices. Runs rose 3.3 percent on the year to 10.69 million barrels per day (bpd). Domestic crude oil output stood at 17.66 million tonnes, up 0.5 percent on the year.

Oil demand fell 1.6 percent from a year earlier to 10.17 million bpd, rising 0.3 percent from October, according to Reuters calculations using preliminary government data.

In its latest forecast released on Friday, the International Energy Agency said it expected Chinese oil demand to grow 6.0 percent this year, noting that “Chinese consumers maintained sufficiently high confidence levels to stimulate escalating vehicle usage.”

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