China Slashes US Commodities Purchases as Trade Tensions Worsen

The LNG terminal at the Yangshan Deepwater Port in Shanghai. commodities. Photographer: Qilai Shen/Bloomberg Photo by Qilai Shen /Bloomberg

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(Bloomberg) — China sharply reduced imports of many US commodities last month, in some cases to zero, as the trade war between the world’s two biggest economies intensified.

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Among the worst affected were purchases of liquefied natural gas and wheat, which both fell to nothing in March, according to Chinese customs data released on Sunday. The US accounted for 17% of China’s wheat imports last year, and 5% of its LNG.

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China imposed retaliatory duties of 10% to 15% on US energy products in February, and at a similar level on agricultural goods in March. China’s purchases are likely to dwindle even further after the trade war kicked into higher gear in early April, when both sides launched blanket tariffs of more than 100% on each other’s goods.  

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Other farm products saw steep declines in March. American cotton imports plunged 90% from the same month last year to just over 14,000 tons. Corn imports fell to less than 800 tons, the lowest level since February 2020.

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Soybeans Rise 

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But soybeans bucked the trend, rising 12% to 2.44 million tons and building on heavy imports in the first two months of the year. The world’s top importer of soybeans is usually reliant on US supplies until the South America harvest becomes available in China’s spring.

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Elsewhere, purchases of US liquefied petroleum gas, a petrochemical feedstock, slumped 36% to 1.02 million tons, while shipments of coal for steelmaking dropped 62% to 208,000 tons.

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But crude oil imports rose 25% to 542,000 tons, in line with a big jump in overall imports, although the US barely breaks the top 10 when it comes to ranking Chinese suppliers.  

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While metals weren’t subject to the new Chinese duties in March, flows of copper were affected by the Trump administration’s pledge to look at tariffing the metal, which has created a massive premium in US prices. 

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That contributed to a slump in Chinese imports of US copper scrap, which more than halved to just over 22,000 tons, while cargoes of concentrate dropped 38% to about 19,000 tons.

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—With assistance from Winnie Zhu and Martin Ritchie.

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