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

Mon Aug 03 2026

China’s outsize footprint in global commodities is helping to cushion international energy shocks and stabilise gold prices, even as its export controls on rare earths and other critical minerals trigger violent price swings in the Western technology supply chain, according to Goldman Sachs.

In a report published on Monday, 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 analysts 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 authors 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.

Gold told a similar story, the analysts wrote, with the investment bank estimating that a roughly 20 tonne increase in China’s average monthly central bank purchases since Russia’s reserves were frozen by Western sanctions in 2022 had lifted global bullion prices by more than 20 per cent.

That buying had dampened price swings, they said, with Beijing tending to slow its purchases after sharp rallies and step up buying after sell-offs, reducing volatility and reinforcing gold’s longer-term uptrend.

However, the investment bank said the dynamic flipped dramatically in critical metals, where Beijing had leveraged its dominance across processing and refining to control the market.

By flooding overseas markets with low-cost exports, the analysts wrote, China depressed global prices below the production costs of foreign rivals, driving competitors out of the market. Once global supply became concentrated in China, Beijing had tightened export controls, triggering severe shortages and price spikes outside the country.

The investment bank said overseas prices for yttrium had traded at 20 times domestic Chinese levels after Beijing restricted exports, and antimony, germanium and tungsten – all strategic inputs for the manufacture of semiconductor and other hi-tech items – had seen similar steep price spikes.

The bank advised investors to include critical metals, not just energy, in broad inflation hedges as Beijing’s policies were more likely to stoke metals volatility than calm it.

It also flagged gold as an attractive entry point, with the analysts saying they expected “re-accelerating central bank gold demand” led by China to help offset near-term downside pressure from the energy and interest-rate markets.

Source: https://www.scmp.com