China plays a crucial role in the global commodities markets as one of the largest consumers and producers of several raw materials, agricultural products, and energy-related commodities. Demand and production trends from the world’s second largest economy can have an impact on the price of several of CME Group’s key commodities benchmarks.

CME Group offers the most comprehensive set of commodity futures and options for managing risk, such as the impact of China’s economy on commodity prices.


  • In 2021 China imported a significant amount of corn and wheat, breaking previous import records (see chart). This surge in demand increased China’s importance in world trade for both commodities, when it already is the world’s largest importer in other agricultural commodities such as soybeans, etc.
  • Corn: the background to this surge in demand was due to a poor 2020 harvest in Chinese corn. However, this was not the only driver behind the increased imports – rumors of a shortfall in the Chinese national grain reserves made the rounds in many trade circles as well.
  • Wheat: imports surged as corn prices rallied dramatically over the course of 2021, resulting in the price spread between wheat and corn narrowing significantly. As a result, many Chinese feeders switched over from using expensive corn to cheaper feed wheat in order to reduce their raw material costs. Feed wheat is a lower quality grade of wheat used mostly for animal feed.
  • As seen from the CBOT price chart below, since the start of 2021, CBOT Corn prices have rallied by the most, rising almost 40% while those for CBOT Soybeans and CBOT Wheat have rallied 31% and 23% respectively.
  • Increased Chinese demand, along with other factors such as inflation and weather issues, contributed to the upwards price movement throughout 2021. For 2022 many uncertainties continue to surround Chinese imports of grains and oilseeds, chief of which is the outcome of the Phase One Trade Deal that was signed two years ago. As China is a major importer of U.S. agricultural products, how the current disagreement on unfulfilled commitments plays out could impact prices for the rest of this year

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  • China’s appetite for oil and petroleum products kept growing over the past two years despite the pandemic and an ambitious emissions reduction plan.
  • China is the world largest importer of crude oil. According to China National Bureau of Statistics, China imported over 10 million barrels per day of crude oil on average over the past two years.
  • Chinese refiners are not only importing oil for the domestic market. In recent years, China has turned to be a net-exporter of gasoline, kerosene, and diesel.
  • But in its 14th Five-Year Plan (2021-2025), Beijing set goals to streamline its refining capacity which is likely to lead to the closure of some small and old plants.
  • In parallel, the first batch of crude oil import quota in 2022 for independent refiners was set lower than in 2021.
  • Lower quotas are aligned with Beijing’s efforts to strengthen supervision of independent refiners in term of operation and environmental protection.
  • With crude oil prices currently at their highest level in seven years, these efforts seem to be very timely for China.
  • In January this year, China announced that it will release oil from its Strategic Petroleum Reserve (SPR), around the lunar new year.
  • This move followed discussions with the U.S about tackling high oil prices.
  • The U.S. has already sold oil from its national SPR recently, while Japan and South Korea have also announced plans for crude sales.
  • As SPR are strategic stocks, crude oil release from Chinese SPR will have to be re-purchased in the future in the international market.
  • Higher oil prices impact China’s natural gas bill as well as imports via pipe from Russia and central Asia and most of its LNG term contracts are linked to oil prices.
  • China has recently become the largest LNG importer in the world, overtaking Japan, and is set to import more ultra-chilled gas in the future.
  • To address its increasing need and diversify its portfolio, Chinese firms have recently looked increasingly at the U.S. LNG market priced on NYMEX Henry Hub.
  • U.S. LNG is playing an increasingly important role to try and balance international gas markets, as currently shown by the European gas crisis.
  • U.S. cargo prices on NYMEX Henry Hub represent an important pool of liquidity for prompt deliveries, that can be sent to Asia or Europe depending on the best offering region.
  • To secure more U.S. cargoes, several Chinese firms ‒ including Sinopec, ENN, and Foran Energy1 ‒ have signed long-term LNG supply agreements in 2021 for up to twenty years.
  • This is a significant change in the LNG market as none of the first wave of U.S. exporting projects had long-term contracts signed with Chinese firms.
  • Henry Hub will play a more important role in Chinese LNG imports once this contract starts delivering cargoes on a regular basis.



  • China is estimated to account for over 50% of global copper demand, making it the world’s largest consumer ahead of Europe, the Americas, and the rest of Asia.
  • While Chile accounts for the largest percentage of mined copper production, China still remains the world’s largest producer of refined copper, accounting for over 40% of global production.
  • China is also the world’s largest importer of refined copper, accounting for 33.7% of global copper imports in 2019, and roughly the same size as Europe and North America imports combined.
  • China’s copper demand has been spurred by several factors:
    • Industrialization and urbanization
      • Copper is heavily used in manufacturing, construction, power generation, and wiring.
    • Renewable energy demand
      • Copper is an important component in energy-efficient generators and renewable energy systems. 
      • Solar and wind energy generation use larger volumes of copper than conventional thermal power generators.
      • Copper demand for solar and wind is expected to rise 56% by 2027 from 2018, with China expected to take a leading role in annual installations of wind turbines.
    • Electric vehicles
      • A typical electric vehicle uses three times as much copper as a conventional internal combustion engine vehicle. Copper is also used in charging stations.
      • China is the largest EV market globally in terms of EV sales, with sales in 1H’21 eclipsing the entire European market.
  • COMEX Copper futures and options are an integral part of the global copper marketplace and offer 23-hour liquidity. The COMEX Copper market is playing an increasingly important role in regional arbitrage trading, alongside the domestic Chinese market given China’s place at the forefront of global copper consumption.

Iron ore

  • China enjoys an even larger position in the iron ore market, accounting for approximately 75% of total global iron ore imports.
  • Iron ore is a key ingredient in steel products, and China is by far the world’s largest steel producer.
  • Iron ore prices in 2021 were volatile and dynamics were impacted by policy measures in the world’s largest consumer.
    • Robust steelmaking demand drove prices to record highs in May’21.
    • However, prices started to roll over in the second half of the year as government steel plant output was slashed to reduce carbon emissions.
    • As a result, China’s iron ore imports fell 10 % in 2H’21 compared to 2H’20, and prices in the seaborne market went from a 2021 peak of just under $230/MT to an annual low of $86/MT, in the space of just a few months.
  • Iron ore derivatives on the international market have been dominated by futures and options linked to seaborne prices (i.e. iron ore in transit to Northern China). 
    • CME Group has a long history with Iron Ore derivatives, having listed futures (product code TIO) in 2010 and options (product code ICT) in 2011. These products are linked to the Seaborne market.
    • We have recently added to our suite, listing China Portside Iron Ore futures on January 10, 2022.
    • These products track the price of medium-grade iron ore at Qingdao port and offer innovative and unique hedging opportunities for physical transactions portside, as well as managing seaborne vs. portside basis risk.
    • Argus Media has written an excellent white paper introducing the portside market, as well as recording a podcast with CME Group to introduce the Argus PCX Index and CME Group China Portside derivatives.


  • Gold is a market in which China is both the world’s largest consumer and producer.
  • China’s gold consumption is dominated by the jewelry sector, often accounting for more than combined investment demand (ETFs, physical bars/coins).
  • China’s gold price as traded on the Shanghai Gold Exchange (SGE) is highly correlated with international prices as determined by COMEX Gold futures (GC), and has historically traded at a premium over international gold prices (the “Shanghai Premium”).
    • This reflects high local demand for physical material in China – the world’s largest source of physical demand.
    • China is a net-importer and local prices will be quoted at a premium to attract gold into China. Exports are prohibited.
    • This relatively stable yet long standing premium in the onshore market changed drastically with the onset of COVID-19 in 2020. 
    • Local demand for jewelry collapsed when China went into lockdown, while international market participants used gold as a safe haven and store of value in the face of a weakening dollar.
    • This led to the Shanghai premium becoming a Shanghai discount for much of 2020, at one point trading at -50 USD/oz.
    • China gold prices have since steadily recovered compared to international prices, with the market now back to a steady premium in Jan’22.
  • China, like with other metals markets, has an important place in the gold ecosystem and it is noticeable how both jewelry demand in China, and non-monetary gold imports into China, mirrored the evolution of the Shanghai Premium.
  • CME Group offers our customers the ability to trade the spread between Shanghai and international gold prices, having launched Shanghai Gold futures in October 2019. These contracts hit volume and open interest records in 2021 and offer unique exposure to a Chinese commodity price, via the international marketplace.

* All figures based on CME Group data unless otherwise stated.

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* All figures based on CME Group data unless otherwise stated.

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