China's cheap commodities exports flood global market; India calls it 'unfair'

SINGAPORE: There’s no let-up in the onslaught of commodities from China.

While the country’s total exports are slowing in dollar terms, shipments of steel, oil products and aluminum are reaching for new highs, according to trade data from the General Administration of Customs. That’s because mills, smelters and refiners are producing more than they need amid slowing domestic demand, and shipping the excess overseas.

The flood is compounding a worldwide surplus of commodities that’s driven returns from raw materials to the lowest since 1999, threatening producers from India to Pennsylvania and aggravating trade disputes. While companies such as India’s JSW Steel decry cheap exports as unfair, China says overcapacity is a global problem.

"It puts global commodities producers in a bad situation as China struggles with excess supplies of base metals, steel and oil products," Kang Yoo Jin, a commodities analyst at NH Investment & Securities, said by phone from Seoul. "The surplus of commodities is becoming a real pain for China and to ease the glut, it is increasing its shipments overseas."



Net fuel exports surged to an alltime high of 2.22 million tonne in November, 77% above the previous month, customs data showed.

Aluminum shipments jumped 37% to the second-highest level on record while sales of steel prodlarly diesel. The nation is also encouraging overseas shipments by allowing independent plants to apply for export quotas to sustain refining operation rates and ease an economic slowdown, according to Yuan Jun, general manager at oil trader China Zhenhua Oil Co.