TELF AG discusses China’s role in the global raw materials market
Oscillations and fluctuations
When we talk about raw materials and the overall trend of this market, we often tend to mention facts of primary importance without examining them appropriately, without explaining with the necessary accuracy their specific role in influencing prices, stocks, or overall performance over a given period of time. The raw materials market, like any other market, is, in fact, subject to continuous oscillations and fluctuations, largely due to external factors (such as geopolitical risks), fears related to the global recession, and possible problems related to transport interruptions, whether by land or sea.
But there are also other, much more specific, factors capable of decisively influencing the supplies of raw materials by states. These factors, in some cases, are linked to what happens in some specific countries, to their growth rates, in short, to every single internal variable, which, in one way or another, could also affect the global market.
One of these nations is undoubtedly China, whose subsoil is enormously rich in raw materials that are very useful for the global energy transition. In forecasts on market trends, but also in reports on raw materials produced by important national institutions, China always occupies an important place, in particular, due to its ability to supply other continents (in particular Europe) with materials first decisive for industrial and sustainable development, in particular from the point of view of sustainability and energy optimization.
In order to understand the importance of China in the raw materials market, it will be sufficient to cite some data: nowadays, more than half of the supplies of critical raw materials for European countries come from China, which has them in abundance. More specifically, China has an absolutely dominant role in the supply of 11 raw materials considered strategic for the industrial development of Europe: Vanadium, Scandium, Barite, Bismuth, Germanium, Gallium, natural graphite, magnesium, tungsten and the highly coveted rare earths, light and heavy.
China has assumed this role of dominance in a very particular historical phase, in which European and international institutions continue to place a clear emphasis on the role of critical raw materials in accompanying the world towards a more sustainable future, and in which most countries, after realizing the great potential contained in critical raw materials and their effective applications, have begun to compete for the production, refining, and supply of these precious resources, as if we had suddenly returned to the times of gold rushes.
For China, the issue of raw materials also represents an important political priority: in its thirteenth five-year plan (i.e., the one between 2016 and 2020), China had already placed an important emphasis on raw materials, in order to maintain its leadership position and safeguard its national stocks in view of a foreseeable increase in demand on foreign markets. For some of these raw materials, now considered decisive by various political and industrial players, China even represents the only supplier in the world: Beijing is, in fact, responsible for 100% of the supplies of heavy rare earths and 85% of the light ones. This position of dominance was not achieved only thanks to the richness of its subsoil but also with a precise political will to enhance its content and take maximum advantage of it.
