March 11, 2015 1:00 pm JST
Chinese gold mystery
Where are all those imports from Switzerland going?
HISASHI TSUTSUI, Nikkei staff writer
TOKYO -- India relinquished its long-held status as the world's biggest gold consumer to China in 2013. But the South Asian country returned to the top of the golden totem pole in 2014.
Consumption of the precious metal fell in both countries last year. In China, in particular, sales of gold bullion and jewelry plunged. But amid that decline, there was an unusual blip in Chinese gold-trade statistics: Over 200 tons of the metal was exported from Switzerland to mainland China in 2014, after years of essentially no shipments. Where in China did all that gold go?
Some 1,095 tons of gold flowed into the mainland through Hong Kong in 2014, down about 400 tons from the previous year. Due to China's previous import restrictions on gold, much of mainland China's imported gold was routed through the former British colony. Though China does not disclose gold import numbers, Hong Kong authorities do. The city's shipments to the mainland fell in summer 2014, prompting many market insiders to conclude that overall Chinese gold consumption slowed.
China eased import restrictions in 2014, making it easier to directly ship gold to Shanghai and across mainland China from other countries. Still, because the country keeps its import data confidential, it is unclear how much gold is actually flowing into the mainland, said an official at a precious-metals company.
Just the facts
Swiss trade statistics for 2014 include gold exports to mainland China. Gold shipments from Switzerland to mainland China fell in the summer of 2014, just like those from Hong Kong did in the same period. Still, Swiss exports to mainland China for the full year totaled 213 tons, compared with almost zero in 2013. Swiss shipments to Hong Kong came to 377 tons.
It is generally thought that quite a lot of gold was directly shipped to mainland China from other countries, too. When also factoring in gold that comes to the mainland through Hong Kong, Chinese imports of the metal for 2014 may actually have topped the figure for 2013. Yuichi Ikemizu, Tokyo branch manager at South Africa-based Standard Bank, said China bought gold more than expected.
A report released in February by the World Gold Council, a London-based research body, said Chinese consumer demand, equal to the amount used for jewelry plus bullion and coin purchases, dropped 38% on the year to 814 tons in 2014. Retail sales of gold were sluggish due to the nation's economic slowdown and Beijing's austerity drive.
Rumor has it
Nevertheless, China's gold imports for 2014 were higher than expected. Most of the imported gold is traded at the Shanghai Gold Exchange. Standard Bank's Ikemizu said it is not clear where the imported gold has gone but that much of it is purchased by domestic financial institutions.
In addition to being a massive gold consumer, China is also the world's biggest producer. The country turned out an estimated 438 tons of the metal in 2013. By comparison, Australia, the second-biggest producer, yielded 266 tons.
For the most part, China does not export gold, said an executive at a major precious-metals company. Most of its output is thought to make its way to the country's central bank and other financial bodies. Statistics and other data provide an image of a country steadily stocking up on the metal.
As for what happens to the gold that enters mainland China, many market insiders say it is stored at the central bank and major financial institutions.
In 2009, China updated its data on gold holdings at official bodies for the first time in seven years. The figure came to 1,054 tons, up roughly 450 tons from the previous count and the sixth-largest amount in the world. More than five years have passed since then, and the latest tally is unknown.
The question of how much gold China holds is of great interest to investors, as it impacts the global supply-demand picture.
No comments:
Post a Comment