Diesel shortage? Chinese refiners’ exports are surging
Oil is headed towards the 100 USD per barrel mark. But that’s not even biggest inflationary risk on the horizon. Diesel prices have surged even more as the world’s refining system struggles to keep up with rebounding consumption and plants that were shuttered during Covid.
China appears to be in a position to take advantage of the global market tightness. It imported record volumes of crude in the first half of 2023, and vast quantities are flowing to its inventories. A lot of that oil is being bought at discount: its June crude imports from Russia were “the largest volume China has ever imported from any country in any month,” per the US Energy Information Administration. In turn, Chinese diesel exports are surging as refiners take advantage of high margins.
Now, China’s refiners have the luxury of choice. As Reuters notes, they could maintain strong processing rates to meet domestic demand and raise exports to capture strong margins. And if crude prices rise further, China could reduce imports and turn to its robust stockpiles.
Uranium prices are at their highest since 2011, popping 12% in the past month alone. Resurgent global interest in nuclear power as a way to boost energy independence explains part of the rally. The coup in Niger, one of the world’s biggest uranium producers, has added to upward pressures.
And the rally may just be getting started. Natural resources investment firm Goerhring and Rozencwajg thinks prices of the radioactive metal could rise as much as four-fold in the next few years.
Uranium spot prices
Downward pressures on copper
Robust copper demand is often an indicator of a growing economy. By that measure, China’s copper industry is another reflection of the country’s lacklustre economy. While demand from the clean energy sector is helping to prop up the red metal’s market, the overall macroeconomic situation is weighing it down. That’s especially so given that construction accounts for a quarter of China’s copper demand—and that sector is under immense pressure from the ongoing property crisis.