Jumping Chinese gold imports on pace to 1,000 tonnes
China continues to pile into gold, with record breaking imports record of 129 tonnes in July, as compared to 76 tonnes in July 2012.
Posted: Thursday , 12 Sep 2013
MUMBAI (Mineweb) -
Even as the Indian government is seeking to restrict gold imports and is coming down hard on gold loan companies across the country, China could well be on its way to import 1,000 tonnes of gold for the whole year if recent buying trends continue.
China has imported through Hong Kong 129 tonnes of physical gold in July, from the 113 tonnes it imported in June, according to the Hong Kong Census and Statistics Department.
This is the second highest import level on record in a month and a year-over-year increase from 76 tonnes in July 2012. The July imports are also over and above the 518 tonnes of gold imports the nation already brought in the first six months of 2013, according to available data.
The country continues to buy at record levels, importing on an average, over 100 tonnes of gold every month for the last five months.
To put the scope of buying in context, the largest gold ETF (electronic traded fund) in the US holds 919 tonnes of physical gold, and China has imported over two thirds that amount in just seven months.
In May China’s gold imports from Hong Kong had increased to 127 tonnes from 76 tonnes in the same month last year. In April, China imported 126 tonnes of gold.
A note by investment bank HSBC states the "recent pull-back in gold prices, sub $1,400/oz level, may be an encouraging sign for price sensitive physical buyers to step back into the market. That said, China’s gold imports may remain at elevated levels for the medium term."
The bank added, "Physical gold demand in China has clearly picked up in July, after gold prices hit the year to date low of $1,181/oz on June 28. This increase in demand helped contributed to bullion’s price recovery to over $1,300/oz at the end of July."
On a net basis, and after deducting for scrap, China’s gold imports from Hong Kong totaled 113 tonnes in July this year, more than double the net imports of 46 tonnes in July last year.
Meanwhile in neighbouring India, high gold imports for the first six months of the year have got the government knocking on temple doors to check on gold treasure troves, in a bid to arrest the economic crisis.
India, which competed with China with its near double digit growth rates a few years ago, appears to have lost its shine in recent quarters given falling investment growth.
To curb India's consumption of gold and help shrink the nation's current account deficit, the government has hiked import tariffs four times in a year's span, while reducing the same only once.
It could well be this is year China overtakes India as the largest bullion consumer.