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Ports see better volumes as stimulus effect shows

A slight gain in domestic bulk cargo shipments on the mainland and a more stable decline in container throughput last month have added to hopes of a recovery in the world's third-largest economy.

Domestic bulk cargo volumes inched up 0.1 per cent to 340 million tonnes in April from a year earlier, reflecting Beijing's 4 trillion yuan (HK$4.54 trillion) stimulus plan.

This was the first time shipments rose this year, the Ministry of Transport said.

Meanwhile, container throughput declined but at a more steady rate. Volumes declined 13.4 per cent to 9.2 million 20-foot equivalent units (teu) last month, compared with a 13 per cent drop in the first quarter.

Import-export trade cargo fell 6 per cent year on year to 160 million tonnes.

'Since the first quarter, there has been a booming demand in domestic trade, especially in cargo from the south of China to the north,' Daiwa Institute of Research analyst Geoffrey Cheng said.

Northern mainland ports have been experiencing strong increases in domestic container trade in the past few months. Domestic container trade at Dalian port surged 50 to 60 per cent year on year in the first quarter, Mr Cheng said.

But domestic trade was still a minor portion of the overall throughput of mainland ports, he said.

Demand in the United States, which accounts for a major part of China's international trade, had not significantly picked up so far, Transport Trackers analyst Charles de Trenck said.

Moreover, the slowdown in iron ore imports and weakening coal shipments last month signalled that it would take more time for the economy to recover.

Iron ore imports, supported by cheaper iron ore prices since January, lost some growth momentum. Import volume gained 24 per cent to 53.5 million tonnes in April, but this was a slowdown from 46 per cent year-on-year growth in March and a 43 per cent increase in February.

Mainland steel mills have cut output since March, resulting in iron ore inventory at major ports rising to 62 million tonnes last month from about 40 million tonnes in January.

'In the short term, the spot freight rates on bulk vessels will be adversely affected by the rise in iron ore inventories,' an official from China Cosco Holdings said.

Iron ore shipments account for 45 per cent of total bulk cargo shipments at China Cosco and about 50 per cent of the international bulk cargo demand.

Another economic indicator that suggests the mainland's economic recovery is not yet on a smooth track is power generation.

Electricity output was estimated to have fallen 4 per cent year on year last month, greater than the 2.01 per cent decline in March, China Daily said in a report quoting preliminary industry statistics seen by insiders.

Previously, the output showed a narrowing trend, as March's decline moderated from a 5.22 per cent drop in the January-February period, an 8.93 per cent fall in December last year and an 8.14 per cent decline in November.

Power demand is a barometer of the health of a key part of the economy. About 70 per cent of power generated on the mainland is consumed by the industrial sector.

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