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China’s Mineral Import Costs Continue To Grow

As the largest developing country in the world, China needs a tremendous mineral resource to realize modernization. However, the increasingly complex international situation has made it more difficult to obtain global resources for China in recent years.

Global Price Fluctuation

Mineral resources have attracted more and more attention from various countries due to their global allocation, especially emerging strategic minerals such as rare earth, lithium, and cobalt. Since 2022, international mineral price fluctuations have intensified due to multiple factors, such as COVID-19 and the Russia-Ukraine conflict. In 2023, global mineral price fluctuations and the uncertainty of the safe supply of mineral resources are expected to intensify due to the three primary factors.

Factor 1: The Russia-Ukraine conflict exacerbated the tension in energy and food supplies.

Fossil fuels regained favor in the market, natural gas and thermal coal prices soared, and the costs of food-related minerals such as potash and phosphate rose to historic highs. On December 30, 2022, the US natural gas futures price was US$4.56/million BTU, a year-on-year increase of 22.1%; the Australian thermal coal FOB price was US$348.56/t, a year-on-year increase of 126.7%. The ex-factory price of potassium chloride (62% powder) in China is 3,500 yuan/t, a year-on-year increase of 21.1%; the ex-factory price of phosphate rock (P2O5≥30%) is 1,110 yuan/t, a year-on-year increase of 48.0%.

Factor 2: The global manufacturing industry is in a downturn, and the prices of non-ferrous metals such as copper, aluminum, and zinc have fallen after hitting record highs.

Factor 3: With the rapid development of electric vehicles, the prices of lithium and graphite, the primary raw materials for power batteries, have been rising all the way, the price of rare earth has been high, and the price of nickel has fluctuated sharply.

Import Costs Continue To Grow

In 2022, global trade growth slowed down sharply, with a growth rate of 4.3%, 5.8 percentage points lower than that in 2021. Affected by the international environment, China's bulk mineral imports have decreased but remain high. China's oil, natural gas, coal, iron, and copper ore imports were 4.5 trillion yuan, a year-on-year increase of 16.0%.

In 2022, crude oil imports were 510 million tons, a year-on-year decrease of 0.9%; the dependence on foreign oil was 70.6%, a reduction of 0.1 percentage points from 2021.

Affected by high international natural gas prices, natural gas imports decreased significantly to 150.76 billion cubic meters, a year-on-year decrease of 9.9%; natural gas foreign dependence was 41.0%, a reduction of 3.7 percentage points from 2021.

In 2022, iron ore imports were 1.11 billion tons, a year-on-year decrease of 1.5%; iron ore's foreign dependence is 74.1%, consistent with 2021. In 2022, the import volume of copper concentrate was 25.27 million tons, a year-on-year increase of 8.0%.

China's External dependence on oil & gas and iron ore from 2011 to 2022

Source: National Bureau of Statistics of China

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