China's massive commodities appetite moves markets
Monday, 25 October 2010
LONDON, Oct 24 (AFP): China, the world's second largest economy and its number one energy consumer, is shaking up global commodities markets where its potent growth momentum is also powering a rise in metals prices.
"China is now the largest energy consumer by our definition," Nobuo Tanaka, head of the International Energy Agency, said recently.
"Probably half of the oil demand increase comes from China. China's consumption is growing, growing, but we don't know how long China will continue to grow."
China, which relies on coal to meet 70 per cent of its energy needs, is nonetheless the world's second largest oil consumer behind the United States.
"The center of gravity (in the energy market) is shifting from the Middle East to Asia," Mikkal Herberg of the National Bureau of Asian Research told a conference here earlier this month.
China has stepped up an investment drive to assure itself of a steady supply of oil from Iraq to Latin America where the leading Chinese refiner Sinopec in early October acquired a 40-per cent stake in the Brazilian branch of Spanish energy company Repsol.
"There is in China a big supply concern of ensuring what they need -- energy and food but also metals," noted Philippa Malmgren of the Canonbury Group.
Given the depth of its demand, China is fuelling a rise in base metals prices that according to some analysts could be maintained for the next several years. Copper prices recently rose to the levels that prevailed before the 2008 financial crisis while prices for tin hit record highs.
Analysts have said small increases in the supply of metals would likely prove to be insufficient to meet rising demand from emerging markets.
"China is now the largest energy consumer by our definition," Nobuo Tanaka, head of the International Energy Agency, said recently.
"Probably half of the oil demand increase comes from China. China's consumption is growing, growing, but we don't know how long China will continue to grow."
China, which relies on coal to meet 70 per cent of its energy needs, is nonetheless the world's second largest oil consumer behind the United States.
"The center of gravity (in the energy market) is shifting from the Middle East to Asia," Mikkal Herberg of the National Bureau of Asian Research told a conference here earlier this month.
China has stepped up an investment drive to assure itself of a steady supply of oil from Iraq to Latin America where the leading Chinese refiner Sinopec in early October acquired a 40-per cent stake in the Brazilian branch of Spanish energy company Repsol.
"There is in China a big supply concern of ensuring what they need -- energy and food but also metals," noted Philippa Malmgren of the Canonbury Group.
Given the depth of its demand, China is fuelling a rise in base metals prices that according to some analysts could be maintained for the next several years. Copper prices recently rose to the levels that prevailed before the 2008 financial crisis while prices for tin hit record highs.
Analysts have said small increases in the supply of metals would likely prove to be insufficient to meet rising demand from emerging markets.