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Factbox-China’s key commodities targeted by Beijing’s recent measures

Published 08/04/2021, 06:20 AM
Updated 08/04/2021, 06:27 AM
© Reuters. FILE PHOTO: An employee monitors molten iron being poured into a container at a steel plant in Hefei, Anhui province September 9, 2013.  REUTERS/Stringer/File Photo
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By Shivani Singh and Min Zhang

BEIJING (Reuters) - As a key producer, importer and consumer of most of the world's major commodities, China is uniquely sensitive to sharp price rises or supply disruptions in the raw materials on which its manufacturing sector and massive population depends.

After the prices of critical industrial inputs from coal to copper surged to record highs this year, Beijing deployed its most comprehensive and far-reaching measures to date to try and tame commodity markets, including selling metal from strategic reserves and threatening to punish any entities found to be hoarding supplies or inflating prices.

Below is a list of key commodities which have been targeted by Beijing's recent measures.

CRUDE OIL

China is the top importer and the second largest consumer of crude oil.

Over the past 5 years, oil imports have grown by an average annual rate of nearly 10%, and the country accounts for 44% of the worldwide increase in oil imports since 2015, when Beijing issued import quotas to independent refiners.

Beijing's crackdown earlier this year on the misuse of import quotas could now see China's oil import growth sink to the lowest in two decades.

COPPER

China accounts for about half the world's copper consumption.

The red metal is used in home appliances, power cables and electronics and has seen a huge demand rebound as global economies recover from the pandemic.

After local prices hit record highs this year, Beijing announced rare strategic reserve sales.

China consumed 11.98 million tonnes of refined copper in 2020, when its imports jumped 37% to 4.67 million tonnes, according to state-backed research house Antaike.

ALUMINIUM

China, the world's top aluminium producer and consumer, produced record levels of the metal used in cars, beverage cans, wires and cables last year.

In 2020, output was 37.08 million tonnes, up 4.7% according to NBS data, while consumption rose 4.8% to 38.35 million tonnes, according to Antaike.

China's primary aluminium imports rose more than 14 fold to 1.06 million tonnes in 2020, NBS data showed.

ZINC

China's refined zinc imports fell 21.1% to 477,406 tonnes in 2020, customs data showed.

It consumed 6.724 million tonnes of refined zinc in 2020, up 1.3% year-on-year, accounting for just over half of global usage, according to the International Lead and Zinc Study Group.

China's own refined zinc production last year rose 2.7% to 6.43 million tonnes, according to NBS.

COAL

The world's biggest coal miner and consumer produced 3.84 billion tonnes of coal in 2020, up 2.4%, data from the National Bureau of Statistics showed.

After prices hit record highs this spring, authorities urged local miners to raise output and launched a probe into hoarding and price gouging.

China imported 303.99 million tonnes of coal in 2020, up 1.5% year-on-year, and consumed around 4 billion tonnes according to Reuters calculations based on official data in China.

IRON ORE

China, the world's top steel producer, is also the biggest consumer of iron ore. It brought in 1.17 billion tonnes of the steelmaking raw material in 2020.

The country possesses abundant resources and produced 866.72 million tonnes of crude iron ore last year.

However, the grade of its domestic ore is much lower than that of imported ore, containing only around 30% iron content compared to more than 60% from key producer Australia.

China's iron ore consumption in 2020 was estimated at 1.397 billion tonnes and is seen dipping to 1.38 billion tonnes this year, according to a government consultancy.

Beijing launched a crackdown on hoarding in June following a more than 30% price climb between Jan. 1 and mid-May.

PORK

China is the world's top pork importer and consumer and has been rebuilding its pig herds after African swine fever outbreaks from 2018 onwards.

China consumed 41.5 million tonnes of pork in 2020, or 43% of the global total, according to the United States Department of Agriculture (USDA). It imported 4.39 million tonnes of pork in 2020, a more than two fold increase, according to customs data.

A steep rise in the number of hogs and more herds being sent to the slaughterhouse as farmers worry about renewed outbreaks of African swine fever has resulted in a surge in pork output this year. Pork and hog prices collapsed by more than half, forcing authorities to make rare reserve purchases in a bid to stabilise the sector.

SOYBEANS

China is the world's top consumer and importer of soybeans, a key feed ingredient.

China consumed 114.5 million tonnes of soybeans in the 2020/21 year, or 31% of the world total, according to USDA data.

It imported 100.33 million tonnes of the oilseed in 2020, up 13.3% year-on-year, according to China's General Administration of Customs. Imports are used mainly by the processing sector to produce soymeal for animal feed, and vegetable oil.

Soybean imports in the later months of 2021 are expected to slow after a record first-half, with a drop in hog sector profitability seen reducing demand for soymeal.

CORN

China is the second largest consumer of corn after the United States, accounting for around a quarter of the world's corn according to USDA data.

Corn imports in 2020 were 11.3 million tonnes, more than double the previous year and exceeding the official annual tariff-free quota allowance of 7.2 million tonnes for the first time.

Authorities have encouraged growers to expand the planting area in 2021, and have made rare sales of imported corn stocks in a bid to cool local prices.

WHEAT

China is the top wheat consumer, making up a fifth of the total.

© Reuters. FILE PHOTO: An employee monitors molten iron being poured into a container at a steel plant in Hefei, Anhui province September 9, 2013.  REUTERS/Stringer/File Photo

In 2020, China imported 8.38 million tonnes of wheat, up 140% year-on year, against a quota of 9.64 million tonnes.

Record high corn prices have sparked feed producers to replace corn in animal rations with higher-protein wheat this year, drawing down local stockpiles and also disrupting demand for other protein sources like soymeal.

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