Imports continue to remain robust

　　The selloff in commodities and mining equities yesterday has in part beenblamed on weak China import data. Yes, import volumes were down month onmonth, but this is not unexpected given the near record March, and the lessfavourable arbitrage. Imports were still up year on year, with the highlightbeing the lower aluminium semis exports. (Aluminium is the only base metalpositive year to date). Iron ore trading volumes on the Dalian exchange havedeclined sharply since the April 20th peak. However trading levels remainelevated and we have noted a slight increase over the past few days. Given therise in open interest and falling prices, the market could now be short.

　　Copper cathode imports fall in April, which was no real surprise

　　Copper cathode imports in April (450kt) were down significantly from the alltime high of last month (570kt) representing a c.21% month on month decline.The month on month decline was totally expected in our view, given that theless favourable arbitrage in April. The import number is however still up c.5%year on year. The cumulative imports for first four months of this year was upby c.23% when compared with the same time period of last year.

　　Iron Ore imports into China were flat month on month, but at robust levels.

　　Iron Ore imports into China during April (83.9Mt) were down by c.2% monthon month but up c.5% year on year. Year to date cumulative imports (up 6%)for the first four months of 2016were robust when compared with the sameperiod of last year.

　　Steel exports remain robust amidst weak domestic demand

　　Exports of steel products (9.08Mt) were down c.9% month on month, but upc.6% year to date thereby reinforcing the market view that, Chineseovercapacity is being exported amidst weaker domestic demand. Ourinterpretation is that trade channels established over the past two yearscontinue to provide a secure off-take for rising output. Year to date, steelexports were up c.8% in first four months, when compared to same period oflast year.

　　Aluminium semis exports down year on year

　　The bright spot of April trade data is that of the slowdown of ChineseAluminium semis export. Exports in April (400kt) were down by c.5% month onmonth and 8% year on year. For the first four month of 2016, semis exportswere down 10.3% when compared to same period of last year. The fall inChinese semi’s export is consistent with the unfavourable semi’s exportarbitrage in the market due to stronger than expected domestic demand.

　　Demand for crude oil is robust

　　Crude oil imports in April (32.6Mt) were robust and were up c.8% year on yearand flat over the month. For the first four month of 2016, Crude imports wereup 12% when compared to same period of last year.