China-Iran Trade Report (May 2020)
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Iran Trade Deficit With China Widens as Oil Imports Plummet
New data released by the General Administration of Customs of the People’s Republic of China (GACC) points to a widening reported trade deficit. Non-oil imports fell to USD 325 million in May, down from USD 405 million in April.
Disruptions in Iranian oil and non-oil exports have recently contributed to Iran’s currency, the rial, falling to a historic low against the dollar. The dollar now worth around 200,000 rials. The value of the rial can be considered a lagging indicator for the trade disruptions that shook the country in April and which are now reflected in the new GACC customs data. The trade with China can recover in the coming months, but it remains an open question as to whether Chinese buyers will have reoriented their supply chains away from Iran over the last few months.
More positively for Iranian enterprises, Chinese exports to Iran continue to indicate a post lockdown recovery. Exports of goods in HS Section 16 (includes machinery and mechanical appliances) were down 15 percent from the April total. But the May total of USD 278 million remains considerably higher than the March level of USD 208 million which concurred with the peak of Iran’s coronavirus crisis.
The challenge for Iran is sustaining imports from China at a time when its own exports to the country continue to underperform. Exports continued to show weakness in May, reflecting the reduced cargoes leaving Iranian ports in April during the nationwide lockdown.
Compared to April totals, import values in May fell a staggering 57 percent in HS Section 5 (includes crude oil), 25 percent in Section 6 (includes chemical products), and 13 percent in HS Section 7 (includes plastics)—declines added to poor performance between March and April. However, Chinese imports from HS Section 15 (includes iron and steel) recovered somewhat, rising 18 percent to total USD 32 million.
The declared value of China’s imports of Iranian oil (HS Chapter 27) fell below last month’s historic lows and registered at just USD 44 million. However, imports from Malaysia rose by USD 200 million, indicating that Iranian oil continues to be reexported via Malaysia. Data from TankerTrackers.com places Iranian oil exports in April at 900,000 bpd—a healthy total given the pressure of U.S. secondary sanctions—these exports would have arrived in Chinese ports in the month of May.
