China Gold Imports Drop as Local Discount Curbs Shipments

China’s gold imports from Hong Kong dropped in March as local prices fell below the international benchmark in London for the first time in more than a year.

Net imports totaled 80.6 metric tons last month, compared with 111.4 tons in February and a record 130 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. Exports to Hong Kong from China rose to 25.3 tons in March from 15.8 tons in February, the Statistics Department said in a separate statement. Mainland China doesn’t publish such data.

Bullion for immediate delivery on the Shanghai Gold Exchange was $1.02 an ounce below the price in London on a monthly average basis in March. That was cheaper the first time since September 2012, data tracked by Bloomberg show. Weakening demand from China may weigh on the global benchmark price that fell 3.2 percent last month.

“Banks changed their ‘import at any time’ mentality as the local gold price turned to a discount,” said Liu Xu, an analyst at Capital Futures Co. in Beijing. “Chinese consumers no longer have an indiscriminate appetite for gold.”

Chow Tai Fook Jewellery Group Ltd., the world’s largest jewelry chain, said total same-store sales rose 4 percent in the three months through March, slowing from 11 percent in the previous quarter, according to a statement in April.

Surpassing India

China overtook India as the largest user last year as the biggest price drop in more than three decades spurred purchases, the World Gold Council said in February. The nation consumed a record 1,066 tons last year as demand for bars, coins and jewelry jumped 32 percent, according to the council.

“Chinese demand may be more price-sensitive than we had thought, taking a hit as gold prices climbed too fast,” said Duan Shihua, a partner at Shanghai Leading Investment Management Co.

Bullion has advanced 8.1 percent in 2014 on rising consumption in Asia and as turmoil in emerging markets and signs the U.S. recovery may be faltering boost demand for the metal as a haven.

Gold holdings in exchange-traded products climbed 0.8 percent in March, data compiled by Bloomberg show. They declined last year for the first time since the products were introduced in 2003.

Bullion for immediate delivery in London traded at $1,303.60 an ounce at 5:05 p.m. Beijing time. Bullion of 99.99 percent purity on the Shanghai Gold Exchange dropped 1.9 percent in March, the first decline in three months.

Mainland Chinese buyers purchased a total of 105.8 tons in March, including scrap, compared with 127.2 tons in February and 223.5 tons a year earlier, data from the Hong Kong government showed.

— With assistance by Feiwen Rong

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