Gold imports by China from Hong Kong more than doubled to an all-time high in March as buyers in the biggest consumer after India boosted purchases, underscoring increased bullion demand in the world’s second-largest economy.
Mainland buyers purchased 223,519 kilograms (223.52 metric tons), including scrap, compared with 97,106 kilograms in February, according to Hong Kong government data yesterday. Net imports by the mainland, after deducting flows from China into Hong Kong, were 130,038 kilograms compared with 60,947 kilograms a month earlier, according to Bloomberg calculations.
The shipments preceded gold’s plunge into a bear market last month, with prices tumbling 14 percent in the two days through April 15 in the worst drop in three decades. The slump led to a surge in demand for jewelry, coins and bars from India and the U.S to China. Separate data yesterday showed China’s gold usage rose 26 percent in the first quarter as prices fell.
“This is quite out of expectation as all these imports were done before the market slump in April,” said Qu Mingyu, a trader at Bank of China, one of the country’s three largest bullion banks. “Judging from the explosive growth of trading volume on the Shanghai Gold Exchange in the second half of April, and anecdotes that many jewelry shops are sold out throughout the country, imports might be even more substantial in April.”
Gold for immediate delivery in London dropped 4.6 percent in the first three months of the year as investment demand slumped, then plunged 7.6 percent in April. Bullion traded at $1,448.29 an ounce at 8:08 a.m. in Shanghai. Gold of 99.99 percent purity on the Shanghai Gold Exchange dropped 1.2 percent in March, and was at 293.5 yuan a gram ($1,483 an ounce).
The purchases in March were more than three times higher than the 62,913 kilograms in the same month last year, according to the data from Hong Kong’s Census and Statistics Department. Mainland China doesn’t publish such data.
Exports of gold to Hong Kong from China were 93,481 kilograms in March, according to a separate Statistics Department statement, up from 36,159 kilograms in February, and compared with 32,484 kilograms in March 2012.
Volumes for the spot contract on the Shanghai exchange, China’s biggest cash bullion market, topped 323 tons between April 16 and May 3, according to data compiled by Bloomberg. Volumes reached a record 43,272 kilograms on April 22.
“The trading volume of the spot gold contract on the exchange basically reflected physical demand as the contract is used by fabricators to take delivery of their raw materials,” said Bank of China’s Qu.
Retail gold sales tripled across China on April 15-16 after the rout, according to the China Gold Association. Zhang Bingnan, deputy head of the association, said on May 2 that there’s a shortage of gold jewelry inventory in the country after consumers bought up supplies and the industry is increasing raw-material purchases to ramp up production.
China’s gold consumption jumped 26 percent to 320.54 tons in the first three months from a year earlier, the association said yesterday. Consumption totaled 776.1 tons in 2012, down from 779.8 tons the previous year, according to the producer-funded World Gold Council. China and India account for more than half of global demand.