China imports of crude oil sank in July to a nine-month low and those of iron ore fell for the fourth time in five months as refineries and steel mills cut output due to slackening demand as growth in the world second-largest economy sputtered.

 

China is the top buyer of iron ore, coal and several industrial metals. Investors and miners around the world rely on Chinese appetite for imports to prop up commodities prices struggling with sluggish demand in the United States and Europe.

 

A surprise monthly rise of 6 percent in copper imports in July was the one bright spot amid broader signs from raw material demand that China economy was slowing swiftly. Trade data on Friday showed China total July exports grew a mere 1% well below the consensus call for growth of 8.6%.

 

Mr Gao Hucheng Vice Commerce Minister said China would face a challenge in meeting its target of 10% growth in trade in the second half of the year. The country factory output growth slowed unexpectedly in July to the weakest in more than three years.

 

China implied oil demand stood at its second-lowest this year, despite an annual rise of 0.9% to 9.15 million barrels per day while average daily imports fell 3% from a month ago to hit a nine-month low. The slowdown is hitting oil demand hard in the country that has driven the increase in global fuel consumption for a decade.

 

The International Energy Agency slashed its forecast for Chinese oil demand growth in 2012 by a third to 240,000 barrels per day in its August monthly report on Friday. Just a month ago, the agency forecast growth of 360,000 bpd.

 

Reductions in steel output at mills that are struggling with high inventories as demand slows mean iron ore imports could fall further in the coming months, analysts said.

 

Ms Helen Lau a senior analyst with broking house UOB-Kay Hian said "I expect to see bigger declines in imports in August and September. We've already seen production cuts among steel companies and even the larger ones have scaled back output. More importantly, there are no signs of improvement in steel demand, so steel mills will probably keep inventory of iron ore low."

 

Slowing Chinese demand has resulted in tumbling benchmark prices for steel, iron ore and coal.（Source: Reuter）