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LAWRIE WILLIAMS: China H1 gold demand exceeds 1,000 tonnes

Despite a slightly lower figure for June Shanghai Gold Exchange (SGE) gold withdrawals this year compared with last, year to date figures remain in excess of those at ths same time last year and have already exceeded the 1,000 tonne mark, the first time in four years that they have achieved this level by this time.  Given that gold movements in and out of the SGE tend to be higher in the second half of the year, the world’s largest absorber of physical gold is well on track to maintain that position and perhaps again heading for an annual total of well over 2,000 tonnes (or equivalent to around two thirds of total global new mined gold production.  With Indian consumption flat at best so far this year, the Chinese figure becomes increasingly important in terms of global supply and demand.

Table: SGE Monthly Gold Withdrawals (Tonnes)

Month

  2018

2017

2016

% change 2017-2018

% change     2016-2018

January

  223.58

184.41

225.08

+21.2%

 -0.7%

February*

  118.42

148.24

107.60

-20.1%

+10.7%

March

 192.61

 192.25

183.24

 +0.2%

 +5.1%

April

 212.65

 165.78

171.40

 +28.3%

+24.07%

May

 150.58

 138.08

147.28

 +9.1%

 +2.2%

June

 140.59

 155.51

138.51

 -9.6%

 +1.5%

July

 

 144.71

117.58

 

 

August

 

 161.41

144.44

 

 

September

 

 214.24

170.90

 

 

October

 

 151.54

 153.25

 

   

November

 

 189.10

 214.72

  

  

December

 

 185.21

 196.37

 

    

Year to date

  1040.24

984.34

973.11

+  5.58%

 

+6.90%

Full Year

 

 2,030.48

 1,970.37

 

 

Source: Shanghai Gold Exchange.  Lawrieongold.com 

China remains the world’s largest gold producer by a fairly large margin over second placed Australia and third placed Russia, both of which are seen to be increasing annual physical gold output – see: World Top 20 Gold producing nations in 2017 – not peak gold yet!  China’s own production appears to be falling so, in order to maintain its apparent demand levels it will need to import more gold this year than last so import figures, particularly from Hong Kong, Switzerland, the U.K., the U.S. and Australia, all of which break down their gold exports by destination nation, will need to be monitored closely to pick up the trends. 

So are SGE gold withdrawals a good representation of total Chinese gold demand.  We think so in that the figures are far closer to the sums of known Chinese imports plus China’s own gold output plus an allowance for scrap supply than the much lower gold demand figures estimated by the various majoe gold consultancies which tend to utilise far more restricted parameters for what they see as consumption.  They appear to ignore, for example, imports by the banks and other entities utilised in domestic financial transactions, thus the SGE gold withdrawal figures would appear to be far closer to actual gold flows into mainland China than other measures.

06 Jul 2018

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com

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