Demand for gold bars in China, the world’s biggest bullion market, soared by more than half in the first six months of the year as investors sought a haven from financial and geopolitical risks.
Sales climbed 51 percent to 158.40 tonnes from a year earlier, the China Gold Association said in a press statement sent via Wechat on Friday.
Overall gold consumption climbed almost 10 percent to 545.2 tonnes, including 330.8 tonnes for jewelry sales, while industrial demand and other uses increased 9 percent.
Investor concerns earlier this year over the depreciation of the Chinese yuan and instability in the stock market, as well as worries about the slowdown in property prices, spurred demand for gold.
Imports from Hong Kong last month climbed as gold retreated on the global market, according to data from the Hong Kong Census and Statistics Department compiled by Bloomberg.
“Physical gold is playing an increasingly important role in Chinese residents’ investment portfolio,” the association said. “Gold is broadly favored by investors as a store of wealth as global markets become more fragile, with the [US] Federal Reserve raising interest rates and increasing geopolitical uncertainty.”
Demand for all of this year might exceed 1,000 tonnes, the highest level in four years, as bar sales surge, Zhang Yongtao, the association’s secretary-general, said in an interview in May.
Domestic output fell 6 percent to 241.5 tonnes in the first half amid more stringent environment rules and depletion of mine resources, the association said on Friday.
Gold for next month delivery on Friday settled at US$1,268 per ounce, up 1.12 percent from last week’s US$1,254.90.
POTASH RECOVERS
The global potash market is rebounding from a decade of weakness as cheap prices for the crop nutrient help drive sales in India and China.
Potash Corp of Saskatchewan Inc raised its global shipment forecast for the industry to 62 million to 65 million tonnes for this year, up 1 million tonnes from an earlier projection.
A good monsoon and increased acreage will help boost sales in India while exports to Latin America are poised to reach a record, the company said in a statement on Thursday as it unveiled better-than-expected second-quarter earnings.
Shipments to China, the largest market, are seen rising to as much as 16.5 million tonnes.
Canpotex Ltd, the joint venture handling overseas potash sales for Potash Corp and its two largest North American rivals, has said in the past week that shipments to China might climb 31 percent this year and that it has signed supply contracts at prices US$11 per tonne higher than last year.
“For the second half of 2017, we anticipate rising consumption,” Potash Corp chief executive officer Jochen Tilk said on an earnings call. “Affordability will continue to underpin strong potash demand.”
Potash prices have been in a downward trend for a decade due to excess production capacity.
Lower crop prices cut farmer spending, undermining demand for the commodity, which strengthens plant roots and boosts drought resistance.
Potash Corp, which plans to merge with Canada’s Agrium Inc, has reduced its own production capacity to help balance the market.
Sales volumes tend to rise amid low prices, Atlantic Equities analyst Colin Isaac said, and rising shipments might not be a sign of any structural demand change.
“It probably just reflects that prices are lower,” Isaac said by telephone. “That’s been the trend.”
In the US corn belt, potash spot prices have gained 23 percent since hitting a nine-year low in July last year, according to Green Markets data.
Sales volumes usually get a boost once a Chinese settlement is reached, said Jason Miner, a Bloomberg Intelligence analyst.
“Demand is fairly solid,” Edward Jones & Co analyst Daniel Sherman said by telephone. “Potash itself is looking like we probably bottomed in 2016.”
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