China’s outsize commodities footprint cushions global energy shocks: Goldman Sachs

Goldman Sachs analysts Daan Struyven and Lia Thomas reported on Monday that China has become the de facto 'volatility arbiter' for global commodity markets, dampening price volatility in hydrocarbons and gold through price-sensitive import demand while amplifying volatility in critical metals where it leverages supply chain dominance in AI and geopolitical competition with the US. The report noted that low Chinese crude imports helped prevent oil prices from rising further despite the sharpest supply shock on record, and that monthly central bank purchases since 2022 have lifted global bullion prices by more than 20 percent.

China’s outsize commodities footprint cushions global energy shocks: Goldman Sachs Analysts at investment bank say Beijing has become de facto ‘volatility arbiter’ for global commodity markets Goldman Sachs https://www.scmp.com/topics/goldman-sachs?module=inline&pgtype=article . In a report published on Monday, Goldman commodities analysts Daan Struyven and Lia Thomas cast Beijing as the global commodity markets’ de facto “volatility arbiter”, arguing that Chinese policies pulled price volatility in opposite directions depending on whether it acted as a price-sensitive buyer or a dominant producer. “China policy tends to dampen price volatility in hydrocarbons and gold through price-sensitive import demand,” they wrote. “By contrast, it tends to amplify volatility in critical metals, where China can use supply chain dominance as leverage in its AI and geopolitical competition with the US.” That contrast had been visible in energy markets this year, the report said, with low Chinese crude imports one of the main reasons oil prices had not risen further despite the sharpest supply shock on record. Describing China as a “swing consumer”, the report said Beijing had helped to stabilise markets since March by cutting net imports of seaborne crude oil and liquefied natural gas, while boosting net exports of organic chemicals and plastics. monthly central bank purchases https://www.scmp.com/business/commodities/article/3359742/china-extends-gold-buying-binge-20th-month-amid-beijings-de-dollarisation-push?module=inline&pgtype=article since Russia’s reserves were frozen by Western sanctions in 2022 had lifted global bullion prices by more than 20 per cent.