LAWRIE WILLIAMS: Chinese gold demand picking up nicely despite lockdowns
Chinese gold consumption in July, as represented by withdrawals from the Shanghai Gold Exchange (SGE) appeared to be picking up strongly compared with a year earlier. The latest figures put the potential annual figure back on track for a decent increase over that for 2021 assuming the improved levels hold up for the remainder of the year. Whether they will be sufficient to regain the 2,000 tonne annual total, last seen pre-Covid in 2019, remains to be seen, but probably unlikely. However an annual total of around 1,900 tonnes – an increase of around 9% on last year’s total withdrawals figure, looks to be possible.
Chinese consumption so far this year has been limited by the country’s zero-Covid policies, which have led to huge total lockdowns in major conurbations, including Shanghai, and most recently in Wuhan again. These have severely limited demand in these key urban centres which have been the seat of much of the Chinese demand being the most important earnings locations.
Table: China SGE Monthly Gold Withdrawals 2020-2022 (Tonnes)
|
Month |
2022 |
2021 |
2020 |
% change 2021-2022 |
% change 2020-2022 |
|
January |
185.51 |
159.49 |
110.87 |
+16.3% |
+67.3% |
|
February* |
92.43 |
92.39 |
28.99 |
0% |
+218.8% |
|
March |
103.79 |
167.74 |
82.27 |
-38.1% |
+26.15% |
|
April |
83.74 |
148.04 |
95.80 |
-43.4% |
-12.59% |
|
May |
103.12 |
105.06 |
69.18 |
-1.9% |
+32.9% |
|
June |
140.13 |
132.80 |
85.71 |
+5.5% |
+63.5% |
|
July |
160.77 |
110.61 |
82.94 |
+45.3% |
+93.8% |
|
August |
149.95 |
111.37 |
|||
|
September |
190.87 |
153.98 |
|||
|
October* |
136.62 |
94.28 |
|||
|
November |
158.31 |
127.65 |
|||
|
December |
193.44 |
162.30 |
|||
|
Cumulative |
869.49 |
805.52 |
472.82 |
+7.94% |
+83.89% |
|
Full year |
|
1,745.70 |
1,205.33 |
Source: Shanghai Gold Exchange, Sharps Pixley.
*Months incorporating Golden Week holidays when SGE closed for a week
Looking at published gold export data from those countries which release this information, it is a little difficult to reconcile the apparent growth in Chinese consumption suggested by the latest SGE figures. However we have to assume China’s own gold production remains the world’s highest for now, while Russia, probably the world’s No. 2 producer, may be struggling to find a friendly recipient for its gold given Western sanctions. China is not part of the sanctions regime and shares a border with Russia, so would be a likely taker, particularly if offered at a discounted price and neither country tends to be particularly forthcoming about mutual trade statistics when it suits them to be obscure. China is also probably the key importer now of Russian oil and gas, so extending this to gold would be a natural progression.
From the overall global gold demand perspective, gold demand also appears to be picking up nicely in the world’s other major national gold consuming nation – India. Here the latest gold export statistics from Switzerland, usually a great indicator of global directional gold flows, puts India back on top as the No.1 recipient of Swiss gold exports by far. It is way ahead of China and Hong Kong combined, although as stated above this could well be because of enhanced gold flows to the Middle Kingdom across the border from the Russian Federation.
08 Aug 2022 | Categories: Gold, China, Russia, India, Switzerland
