LAWRIW WILLIAMS: Chinese gold demand slips for yet another month
The Shanghai Gold Exchange (SGE) has released its gold withdrawal figures for the month of October and these show another sharp fall from those of a year earlier suggesting a fall in the nation’s gold consumption again during that month. October, though, tends to be something of an anomaly as it contains the week-long Golden Week holiday when the SGE is closed and no transactions are undertaken, so the figures are below those of most other months, but the fact that they are comfortably below those of October 2021 does confirm something of the downturn we had noted in earlier months.
This could be a continuing result of the somewhat draconian Covid-related shutdowns which have been imposed on some key areas to prevent the revived spread of the pandemic. These lockdowns would probably have been unacceptable almost anywhere else in the world and have even reportedly generated protests in such a well-regulated society. They have even prompted Apple, which manufactures most of its iPhones in China, to warn of delivery delays as some of its suppliers have consequently been forced to suspend production. This suggests some key industrial areas have been so affected.
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 |
166.12 |
149.95 |
111.37 |
+9.7% |
+32.96% |
|
|
September |
179.84 |
190.87 |
153.98 |
-6.13% |
+14.3% |
|
|
October* |
98.48 |
136.62 |
94.28 |
-27.2% |
+4.4% |
|
|
November |
158.31 |
127.65 |
||||
|
December |
193.44 |
162.30 |
||||
|
Cumulative |
1,313.93 |
1,393.57 |
915.39 |
- 5.74% |
+43.54% |
|
|
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
At the moment it looks like China is headed for an annual gold consumption figure of a little less than last year’s 1,745 tonnes, but comfortably in excess of the Covid-hit 2020 figure based on SGE gold withdrawal data, which we have always reckoned has approximated to total Chinese annual demand. China remains the world’s largest national gold consuming nation, followed by India where gold demand does appear to have been picking up well again this year. With the World Gold Council’s recent published research showing that global gold demand is higher than a year ago due to record central bank gold purchases and high jewellery consumption (See: Gold demand picking up nicely despite ETF outflows - WGC), this year’s gold demand picture remains positive despite the possible temporary downturn in the Chinese domestic consumption picture.
There are signs that the Chinese government may be considering easing its response to potential Covid infection spread in order to continue the nation’s economic revival in response to global economic pressures. If so 2023 could see a strong revival in global gold demand growth led by China, particularly if central bank demand accumulations remain strong, while global production growth, if there is any at all, will remain minimal.
