- Chinese crude oil imports plunged 41% year-on-year in June to 29.27 million tons — the least since October 2016, close to a decade low — driven by a double shock: the US-Iran war has disrupted Hormuz shipments from the Middle East, which typically accounts for about half of China’s crude purchases, while domestic demand has slowed abruptly; imports were also 12% lower than May, which was itself the weakest month in eight years, suggesting the trend is worsening rather than stabilizing month-over-month.
- China’s commodity trade in June showed a striking split along energy lines: coal imports surged 30% to 42.78 million tons (5-month high) after a mine safety crackdown following May’s Shanxi province blast — the worst coal accident since 2009 — curbed domestic supply; natural gas imports rose 3.7% to 10.93 million tons (also a 5-month high), with the Iran war’s impact on LNG from the Middle East (a third of China’s supply) largely offset by alternative sources; crude oil alone bore the full weight of the Hormuz disruption with no easy substitute.
- The war’s commodity fingerprints extend beyond energy: fertilizer exports plunged 48% year-on-year to 2.23 million tons (lowest since April 2024) as China tightened controls on domestic supplies, since Hormuz is the main transit route for global fertilizer shipments; by contrast, aluminum exports soared 45% to a record 711,000 tons as China fills a global shortage caused by the war; soybean imports increased 11% to 13.55 million tons (13-month high) on arrivals from Brazil and the US following the trade truce, with Beijing ramping up American bean purchases to meet its obligations — and iron ore imports hit the year’s high at 112.69 million tons.
- The oil market is watching for signs that China’s crude imports have bottomed and that Beijing will move to replenish stockpiles — historically a powerful source of demand that can swing global oil prices when Chinese buyers re-enter the market; however, the breakdown of the US-Iran truce this week and Trump’s reimposition of the Hormuz blockade make any near-term recovery in Middle East-origin crude flows deeply uncertain, while China’s Q2 GDP data (due Wednesday July 15) is expected to show growth at the bottom of the official target range, adding demand-side headwinds to the supply disruption.
What Happened?
Chinese customs data released Tuesday showed crude oil imports collapsed to 29.27 million tons in June — a 41% year-on-year drop and the lowest monthly figure since October 2016. The decline reflects both the Hormuz supply disruption (the Middle East accounts for ~half of China’s crude) and an abrupt domestic demand slowdown. Coal imports surged 30% as a domestic mine safety crackdown forced substitution to imports. Natural gas imports rose 3.7%, mostly offset from non-Iran sources. The commodity data package also showed record aluminum exports, plunging fertilizer exports, and strong soybean imports as the US-China trade truce drives agricultural purchases.
Why It Matters?
China is the world’s largest crude oil importer, and its June data is the most concrete evidence yet of the economic damage the US-Iran war is inflicting on global oil demand — not just supply. The 41% import collapse represents millions of barrels per day of demand destruction that is partially offsetting the supply-side disruption from Hormuz, creating a complex oil market dynamic where the war simultaneously removes supply (Hormuz blockade) and destroys demand (Chinese imports). The fertilizer export collapse adds a food security dimension: Hormuz-disrupted fertilizer flows affect agricultural production in South Asia, Africa, and Southeast Asia, creating downstream food price pressures that extend far beyond the energy market.
What’s Next?
Wednesday’s China Q2 GDP and June industrial output data will provide the broader economic context for the commodity trade numbers. If growth has indeed weakened to the bottom of the official target range as expected, Beijing faces pressure to accelerate fiscal stimulus — which would support commodity demand recovery if implemented. The oil stockpiling signal is the key variable to watch: Chinese crude purchases have historically rebounded sharply when prices fall to levels that make strategic stockpiling attractive, and current Brent prices (now rising again on the Iran escalation) may delay rather than accelerate that stockpiling impulse.
Source: Bloomberg
