In the first eight months of 2020, China imported more energy products such as crude oil, natural gas and coal, according to the latest statistics from the country’s General Administration of Customs published on September 7, and the slowing global economy had sent prices lower.
For crude oil, China imported 368 million tonnes over January-August, up 12.1% on year, while the average landed price over the eight months was Yuan 2,306/tonne ($337.6/t), lower by 30.1% on year, the Customs data show, reflecting the violent volatility and the slumps in the global oil market.
As for natural gas, China’s import volume grew 3.3% on year to 65.1 million tonnes, while the unit price fell 18.1% on year to Yuan 2,450/t for the first eight months of 2020, according to the Customs data.
China also imported 221 million tonnes of coal over January-August, the statistics show, up 0.2% on year, while the imported coal unit price fell 8.4% on year to about Yuan 494/t on average over the first eight months.
The on-year increase was rather small against the 6.3% on-year rise in China’s 2019 coal imports as was expected, as the country has been consciously limiting coal imports as part of efforts to control pollution and Beijing’s ongoing shift towards lifting the proportion of ‘clean energy’ in the nation’s energy mix, Mysteel Global noted. China is a core coal producer too, after all.
This year, with many countries still struggling to contain the spread of the COVID-19 at heavy cost to their economy and industrial activities, China has emerged as a crucial importer of many industrial goods and at lower prices too so far in 2020, market sources noted.
“China has been given a greater say in the prices of many commodities until now, as it has become almost the sole buyer with little competition from the other countries,” a molybdenum market source from Central China commented. However, “together with higher imports, the pressure is mounting on domestically-produced supplies of the same kind,” she pointed out.
Molybdenum is used in a certain grade of stainless steel for oil and gas transmission pipeline networks.
The rather bizarre situation in 2020, thus, may in reality help facilitate China’s shift towards clean energy and reduce reliance on coal as the core source for electricity generation, by building up the country’s oil and natural gas reserves via high imports at more affordable prices, Mysteel Global noted.
A report regarding China’s energy market prospect over 2016-2030 by the China Energy Research Society, a think tank of China’s National Energy Administration, stated that China will target to reduce coal in energy consumption to 60% of the total by 2020 and to 49% by 2030. Accordingly, the non-fossil energy proportion will grow to 15% by 2020 and to 22% of the total by 2030.
This will allow China to reduce carbon emissions by 54% over 2016-2030, the report said.
Among the fossil sources for energy generation, China has been veering away from coal in the past few years and tilting towards consuming more oil and gas for the benefits of efficiency and lower emissions, Mysteel Global noted.
The steady build-up in oil and gas reserves via imports and domestic exploitation, in turn, may trigger demand for high-end steel for the manufacturing of oil and gas transmission pipes and storage containers as both will require the characteristics of corrosion resistance, high strength, and pressure endurance, according to a market source in Beijing.
China’s long-term planning in energy consumption optimization for the next 10 years also includes building up more hydro, nuclear, and wind power stations. This strategy will also lead to greater demand for such high-end steel, though the consumption is unlikely to surge in a short period of time, he added.
Written by Hongmei Li, firstname.lastname@example.org
Edited by Russ McCulloch, email@example.com