China gold imports from HK surged in 2011

February 9, 2012 at 12:10


China’s gold imports from Hong Kong more than trebled in 2011 from the year before, hitting a record 428 tonnes as savers flocked to the yellow metal as a hedge against inflation.

China is expected to overtake India soon as the world’s largest gold consumer, and the figures, which are considered a proxy for China’s overall gold imports, underscore the country’s growing appetite for the metal.

The country does not release official data on gold imports or demand, and the Hong Kong import numbers, published by the Hong Kong Census and Statistics Department, are considered to offer a partial view of overall demand.

One trader at a Chinese bank said China’s total imports last year were at least 30 per cent higher than the Hong Kong numbers indicated once shipments from other countries, such as Switzerland and Singapore, were taken into account.

“Even beyond the seasonal factors, there are fundamental reasons why Chinese demand has been strong,” said Nikos Kavalis, commodities strategist at RBS, citing inflation fears and Chinese savers’ preference for hard assets to protect against inflation.

December’s monthly imports slowed to 38.6 tonnes, down sharply from 103 tonnes in November, as manufacturers and banks slowed stocking activities in advance of the holiday season. The total for 2010 was 119 tonnes. Several analysts said that the big drop between the months suggested that China’s central bank might have been building up its gold reserves last autumn, though the central bank does not regularly disclose its holdings.

“One reason for the strong full-year import figures from Hong Kong could be that China is diversifying its official reserves, but it’s hard to say for certain,” said Shi Heqing, a gold analyst with consultancy Antaike.

Signs of physical gold demand have been very strong in China during the holiday season in January and February. Chinese New Year – celebrated from January 22 to February 6 this year – is China’s biggest gold buying season and gold stores in Beijing reported sale increases of between 50 and 60 per cent this year compared with last year’s holiday season.

Underlining the strength of holiday demand, the Shanghai Gold Exchange reported one of its busiest ever months in January, when daily trade volumes averaged 12.2 tonnes per day, up from 10.3 tonnes daily in December and 6.4 tonnes daily in November, according to data published by the exchange.

For 2012 as a whole, analysts believe China’s gold imports are going to continue growing as physical demand stays strong. Bullion has risen by 11 per cent since the start of the year, and was trading at $1,733 a troy ounce on Tuesday.