China’s imports of crude oil, coal, and iron ore reached record highs in 2023, signaling strong performance in the world’s top commodity buyer. However, a closer look reveals several factors that temper this apparent success.
According to customs data released on January 12, China’s crude oil imports increased by 11% in 2023 compared to the previous year, reaching 11.28 million barrels per day (bpd). While this surpassed the previous record set in 2020, it falls short of the International Energy Agency’s forecast of a 1.8 million bpd increase in China’s oil demand.
Other factors in China’s crude oil market also cast doubt on the bullish view. Domestic oil production only rose by 1.8% in the first 11 months of 2023, and significant amounts of crude were being added to storage inventories. Although exact figures aren’t disclosed, estimates indicate that China’s refineries were stockpiling crude rather than buying it due to strong domestic consumption.
Additionally, China’s exports of refined products surged by 16.7% in 2023, the highest level since 2019. This further indicates that the increase in crude oil imports may not be entirely reflective of strong demand.
China’s coal imports witnessed a dramatic increase of 61.8% in 2023, reaching 474.42 million tons. This rise can be attributed to several short-term factors such as the struggles of hydropower and a sharp decline in the price of seaborne thermal coal. However, it is expected that hydropower generation will increase in 2024, potentially limiting the demand for thermal coal.
Iron ore imports, on the other hand, experienced a surprising boost of 6.6% in 2023, reaching a record high of 1.18 billion tons. The key sectors contributing to this increase were vehicle manufacturing, infrastructure development, and steel product exports. While China’s steel production is expected to reach record highs in 2023, it is not projected to surge in 2024 due to moderate economic growth.
Overall, China’s record-breaking imports of crude oil, coal, and iron ore should be assessed in the context of other factors such as stockpiling, fuel exports, and potential changes in energy generation sources. While the figures indicate significant accomplishments, they are also accompanied by nuanced dynamics that paint a more complex picture of China’s commodity market.
The opinions expressed in this article are those of the author, contributing columnist Clyde Russell.
