China
gold imports to keep growing after hitting record high by Lewa Pardomuan and Fayen Wong - Reuters | Tue
May 7, 2013 10:19pm EDT Net gold flows to China from Hong Kong hit
record in March
SINGAPORE/BEIJING, May 7 (Reuters)
- Chinese gold imports are likely to swell further after
more than doubling to an all time high in March as retail
consumers pounced when prices plunged to a two-year low
last month.
China is the world's second largest buyer
after India, and in both countries the steep fall in international
gold prices in April unleashed years of pent up demand for
coins, bars and jewellery.
That will help bolster prices for the metal,
which has been abandoned by funds in other parts of the
world in the wake of its historic fall.
"Physical demand picked up significantly
over the last couple of weeks. Consumers and industrial
users tend to see price drops as buying opportunities,"
Zhang Bingnan, secretary-general of the China Gold Association,
told Reuters.
"Investment demand should continue
to stay strong through the rest of the year because of limited
investment alternatives," said Zhang, adding that gold
sales and processing volumes both spiked in April.
Net gold flows from Hong Kong to China,
the world's No. 2 gold consumer after India, jumped to 223.519
tonnes in March from 97.106 tonnes in February, smashing
a previous record of 114.372 tonnes in December, data from
the Hong Kong Census and Statistics Department showed on
Tuesday (www.censtatd.gov).
That makes up more than half of record gold
exports to China from Hong Kong in 2012, which stood at
557.478 tonnes.
In March, Shanghai gold futures <0#SHAU:>
fetched premiums of more than $30 to global prices, making
it cheaper to buy the metal overseas.
April could see imports swell further after
the drop in international prices spurred frenzied buying
in Asia, leading to a shortage of gold bars and coins in
Singapore as well as Hong Kong, which is China's main source
for gold imports.
Appetite for gold from India and China is
a major factor in international gold prices. The two countries
account for more than a third of global demand, according
to the World Gold Council. China produced 403 tonnes of
gold in 2012, but consumption was more than double at 832.2
tonnes.
Gold tumbled to around $1,321 an ounce on
April 16, its lowest in more than two years, after a fall
below $1,500 and fears of central bank sales led to a sell-off
that stunned investors and prompted them to slash holdings
of exchange-traded funds. It stood at around $1,460 on Tuesday.
"April imports will be stronger than
March," said Ronald Leung, chief dealer at Lee Cheong
Gold Dealers in Hong Kong. "The world was buying gold
and China was no different at all."
HEAVY TRAFFIC
The drop in prices has prompted a gold rush
in China, with Chinese shoppers flocking to retailers to
buy jewellery and bars.
A spokesman for Hong Kong jewellery chain
Chow Tai Fook , the world's largest jewellery retailer by
market value, told Reuters that traffic at its China stores
jumped by 50 percent during the May Day holidays.
The surge in Chinese travellers during the
three-day May Day holiday also drove gold sales in Hong
Kong to rise by an estimated 50 percent, with total gold
sales from April 29-May 2 reaching some 40 tonnes, local
media quoted Haywood Cheung, president of the Hong Kong
Gold and Silver Exchange, as saying.
The jump in Chinese physical demand also
prompted some banks to ship in more supplies from London
and Swiss vaults, traders said.
With China's economy still on shaky ground,
investors there with limited options for their cash could
still see gold as attractive. The fall has hurt big funds
elsewhere that bet on gold continuing a 12 year bull run,
eroding investor confidence in the yellow metal.
China's annual export growth may have picked
up slightly in April due to a low comparison from a year
ago, while import growth probably eased, a Reuters poll
showed, suggesting the underlying momentum for both the
domestic and global economies remains tepid.