How China Affects The Commodities Markets
6 Reasons Why A Soft Landing In China Matters (Part 3 of 7)
3. Resource-hungry China has an outsized influence on most commodities markets.
Market Realist – China affects the commodities markets, including crude oil and gold.
The graph above shows the top five oil consuming economies in the world. The US is at the top of the list, followed by China (FXI), Japan (EWJ), India (EPI), and Saudi Arabia.
China consumes 10.3 million barrels of crude oil (USO) per day. The US consumes 18.5 million barrels a day. The US still consumes almost twice as much crude oil as China. Yet Chinese demand for oil is pivotal. As the number of vehicles have skyrocketed in China, so has the demand for oil in the country.
With a population of close to 1.35 billion, China is the most populated country in the world. Besides oil, China consumes a whole lot of other commodities as well.
China is the world’s largest consumer of steel, iron ore, and coal. China is also the second-highest consumer of gold (GLD), a tad behind India, which consumes most of the yellow metal.
As you can see, China has a pretty big hand in the commodities markets. A slowdown in China is bad news for commodity-driven countries like Brazil (EWZ), Russia (RSX), South Africa (EZA), and so on.
Read on to the next part of the series to find out how China can influence US Treasury yields.
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