China's Ore Demand Flies Under Radar

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"Alaskan gold won't appear in China's official imports report. . ."

A boatload of sandy, gray muck left Alaska a week ago, bound for China. Buried inside the detritus were tiny flecks of gold that China National Gold Group Corp. plans to extract.

The shipment is one of many filled with mineral-rich matter that are sailing into Chinese ports and forming a key, but little-noticed, part of efforts to sate the nation's demand for raw materials.

The Alaskan gold won't appear in China's official imports report or in trade data from major commodity exchanges or bullion markets. China's purchases of copper scrap and investments in oil-sands projects in Canada also fly under the radar, publicly disclosed but not widely watched.

Observers say the low-grade ore making its way to China's shores adds to evidence that Chinese demand for raw materials is greater than standard indicators show, and greater than many investors realize.

Investors instead closely track China's consumption of widely sought commodities, like gold bullion and refined copper. Signs that its hunger is rising or falling can move those markets, and help define its broader economic growth.

During H110, China's refined copper imports fell 13.5%, or 239,000 tons from the same period last year—an apparent sign of weaker demand. But China raised imports of copper scrap and concentrate, which needs further processing. The 362,000 tons of added copper was enough to turn China's imports to a net gain, according to Barclays Capital.

In the case of copper, China's purchases of alternative supplies could change the perception of whether demand is weak or strong, said Kevin Norrish, director of commodities research at Barclays.

Investors who only look at refined copper imports "miss the whole picture," Mr. Norrish said.

The purchases also demonstrate Chinese producers' willingness to expend time, energy and money extracting ore from tons of sand, rocks and dirt.

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