China has been buying up crude oil, copper, coal and a host of other key raw materials even while the financial slump has slashed demand for the exports responsible for the Asian giant's once ravenous appetite.

Despite the sharp drop in shipments, Chinese raw materials buyers have tapped a surge in bank loans to capitalise on low commodity prices and low shipping fees, analysts said.

But the buying is likely to slow, they warned.

"China has been stockpiling commodities since the fourth quarter when prices became really cheap," said Yang Yijun, a commodities analyst at Wellxin Consulting based in the southwestern city of Chengdu.

"But large scale buying is gradually coming to an end. China's reserves are almost at full capacity."

Macquarie Bank warned in a research note last week that "the key concern centres around the scale of Chinese buying".

Over the past three months, as the volume of China's purchases increased, the Standard & Poor's GSCI, an index of global commodity prices, shot up 26.5 percent.

However, overall prices remain lower than before the financial crisis struck. Even with those gains, the overall index is down 58.5 percent from a year ago.

Crude oil prices have risen 39.6 percent in the past three months while copper prices climbed 45 percent, according to the GSCI.

China's State Reserve Bureau has been stockpiling, but so too have producers, distributors and other speculators hoping to profit from an expected rise in prices once the world economy starts to recover.

The China Iron and Steel Association began investigating surging imports after the amount of iron ore coming into the country jumped 33 percent year on year in April, hitting a monthly record of 57 million tonnes, state media said.

Spot prices for iron ore for delivery into China hit their highest level in nearly four months in mid-June, touching 76.50 a tonne, including cost, freight and insurance, according to Dow Jones Newswires.

Beijing ordered banks to cut lending to steelmakers and iron ore importers, who it admonished for failing to "correctly control the volume and pace of iron ore imports in line with the actual demand of domestic steel production," state media reported.

China, the world's biggest steel producer and consumer, imported 188.5 million tonnes of iron ore in the first four months of the year, up 22.9 percent year on year, according to customs data.

"Because of the massive supply, some ships carrying iron ore are having to wait to offload at ports," said Xu Minle, an analyst with Bank of China.

But iron ore was not the only hot commodity in April. Crude oil imports climbed nearly 14 percent, aluminium oxide imports were up 16 percent and copper was up 64.4 percent, according to JP Morgan.

Coal imports soared 168 percent as Chinese utilities increased foreign coal buying during negotiations with domestic producers for better prices.

However, Moody's has changed its outlook to negative for base metals, mining and steel industries in the Asia Pacific region over the next 12-18 months, saying buying has soared ahead of demand.

"China's strategic stockpiling and replacement of lower-quality domestic production with higher-quality imports have supported the recent rally in prices for many base metals," said Terry Fanous, Moody's chief Asia metals and mining analyst.

"But we will not see a sustainable turnaround in demand until the major economies of the US, Europe, and Japan recover," Fanous wrote in a note.

Copper, essential for home appliances and other staples in China's economic boom, was seen as being on the most solid footing, hitting an eight-month high of over 2.45 dollars a pound on the New York Mercantile Exchange on June 11.

But prices fell in the past week as traders feared China's stockpiling was tailing off.

"As China has been the main driver of the copper price recovery so far this year, a period of reduced buying activity may see prices take a bit of a pause," Standard Bank analyst Leon Westgate wrote in a note.

Stockpiling is fraught with risk, especially when borrowed money is used to buy goods when there is no demand, independent Shanghai-based economist Andy Xie said.

"Last year people who stockpiled went out of business," Xie said. "I know one distributor who stockpiled six million tonnes of steel and went bust when it dropped by more than half."

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