Due to China's Raw Material Import Contraction...Possibility of Sharp Decline in Demand for Crude Oil, Gas, and Coal

Impact of Continued COVID-19 Lockdowns and Real Estate Slump in China
Coal and Iron Ore Decline Due to Clean Energy Transition

[Asia Economy Reporter Kim Hyunjung] Bloomberg reported on the 26th (local time) that China's raw material consumption is shrinking, which is expected to cause demand-driven shocks in the global market. Despite various policies by China to revive the economy, consumption has struggled to recover due to the resurgence of COVID-19, real estate slump, and global economic downturn.

The report stated, "China's energy imports sharply declined in June, showing weakness in many raw materials during the first half of the year, signaling a decrease in annual purchases," and forecasted a rapid drop in demand for crude oil, gas, coal, palm oil, and iron ore.

The report analyzed, "China's crude oil imports heavily depend on travel and transportation activities, and as China remains threatened by COVID-19 lockdowns, refiners are reducing purchases, likely causing a decline for the second consecutive year." It noted that stockpiles remain high and international price increases have delayed purchases, so recovery is expected to wait until the fourth quarter. China's crude oil imports had steadily increased every year since 2005 until last year.

Coal and natural gas imports are also sharply declining. Recent economic recession, rising international prices, government support for clean energy, global warming, and rapid growth in renewable energy usage have been cited as causes.

It is certain that coal purchases will decrease for the first time since 2015. According to the China Coal Transportation and Distribution Association, this year's import volume is expected to be 250 million tons, a 22% decrease from the previous year.

China's palm oil purchases have already collapsed. Last month's import volume of 80,000 tons was an 81% decrease from the previous year and the lowest since 2004. The biggest cause was the COVID-19 lockdowns severely impacting the food and beverage industry.

Iron ore imports decreased by 4% in the first half of this year compared to the previous year, as the government ordered steel mills to reduce production to curb carbon emissions. Further import reductions are expected this year due to mandatory cutbacks.

This content was produced with the assistance of AI translation services.