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B1.2.2 Commodity demand during major industrialization periods
70 CHAPTER 1 COMMODITY MARKETS
FIGURE B1.2.2 Commodity demand during major industrialization periods
Four major periods of industrialization have driven commodity demand growth since the beginning of the 1800s: the industrial revolution in the United Kingdom beginning in the late 1700s, industrialization in the United States after the Civil War, expansion of Western Europe and Japan after World War II, and the industrial rise of China since the 1990s. China's strong and sustained commodity demand growth is consistent with the experiences of earlier industrializing countries, but its remarkable pace is unprecedented.
A. Copper demand
B. Coal demand
C. Iron ore demand
Sources: Abstract of British Historical Statistics; BP Statistical Review of World Energy 2021; British Geological Survey; Bureau of Mines Minerals Yearbook; Historical Statistics of the United States; International Historical Statistics; Lemon 1838; Mineral Statistics of the British Empire and Foreign Countries; Statistical Summary of the Minerals Industry; Schmitz 1979; Smil 2017; Stuermer 2017; The Copper Handbook; U.K. Department for Business, Energy & Industrial Strategy; U.S. Energy Information Administration; U.S. Geological Survey; World Bank; World Bureau of Metal Statistics; World Steel Association. A.-C. Share of country or country group in world total. Share of global consumption plotted as three-year moving average to improve readability. Where consumption is not available, apparent consumption (production + imports - exports) is used. When data are missing, especially in the earlier years, linear interpolation is applied. A. Data from 1850 to 2020. B. Data from 1850 to 2020. C. Data from 1857 to 2019. China's iron ore consumption based on gross weight.
COMMODITY MARKETS CHAPTER 1 71
Iron ore. The declines in advanced countries' shares of iron ore are similar to those for coal. However, the huge increase in China's demand for the metal is even more striking than that of coal. Its share of global iron ore demand reached 73 percent in 2013, up from 20 percent in 1991. The rate of increase and the current market share of China's consumption have no historical equivalent.
In terms of intensity of use, China's per capita consumption of copper and coal is now comparable to that of the advanced economies when they had similar per capita incomes (figure Bl.2.3). Despite China's extensive use of coal, its peak per capita coal consumption is much lower than that of the United Kingdom and the United States, partly reflecting the broader range of fuels available today. For example, in 1860, nearly all primary energy consumption in the United Kingdom came from coal; similarly, in the United States, 80 percent of energy consumption in 1910 was from coal.
Iron ore, however, presents a vastly different picture. China's per capita consumption has reached levels far beyond those seen in earlier industrialization episodes, driven almost entirely by the growth in steel production for domestic and export markets. The primary domestic sources of demand for steel are construction, infrastructure, and manufacturing. A large part of the increase in construction and infrastructure has been driven by the large growth in China's urban population, from 20 percent in 1980 to more than 60 percent in 2020.c Rising incomes and new housing have in turn led to increased demand for steelusing durable goods such as automobiles, machinery, and home appliances.
Conclusion
Global commodity demand has shifted significantly over the past 25 years from advanced economies toward EMDEs. The shift has been concentrated in China, which today accounts for more than half of the global demand for coal, metals, and iron ore. Many features of China's industrialization and commodity demand growth are broadly in line with the experiences of the United Kingdom and the United States in the 1800s and early 1900s, as well as in post-WWII Europe and Japan. However, the speed at which China's consumption of commodities, especially iron ore, has increased is unprecedented, and reflects China's rapid industrialization and export-led economy. In addition, a massive shift of population into urban areas has driven large-scale infrastructure projects and soaring residential investment, amplifying the demand for steel and iron ore.
c. In contrast, it took the United States 80 years (1860-1940) to achieve a similar degree of urbanization (Boustan, Bun ten, and Hearey 2013).
