We talk a lot around here (like everyone does) about Chinese commodity demand.
So let this post be a fair warning to you: Soon we’re going to have to start talking more about India. We’re not sure when, exactly, (maybe as soon as this evening), but after reading a thorough report from Barclays about the coming Indian commodity demand boom (and how it will stack up against China), it’s obviously going to be a major discussion point for us.
Here’s the intro from Barclays commodity analyst Yingxi Yu:
In the next five years, we project that India’s primary energy demand will increase by 50% and its metals demand by 80%. By 2030, we estimate that India’s primary energy demand will have increased fourfold from 2010 levels, while its metals demand will be five-times higher. As well as surging industrial needs, we forecast that increased protein demand will more than double milk consumption over the next 20 years.
According to projections by the McKinsey Global Institute, to cope with rising demand India will have to build 700-900mn square meters of residential and commercial space a year up to 2030, equivalent to adding one Chicago every year, and build 350-400km of metros and subways every year over the same period.
India’s domestic output will not keep up with its demand growth. Together with growth in other regions, the world will need a strong supply response in the next few years to satisfy the expected increased demand for resources. We think the most bullish implications are in energy commodities. India’s crude oil imports could exceed 6.5mn b/d by 2025, increasing its import reliance to 87% from the current 75%. Coal imports could reach 250Mtoe by 2025, and gas imports could rise almost five-fold. India’s structural deficit in copper concentrates could exceed 2Mt, and it will require substantial investments in smelting capacity to remain self-sufficient in refined metals. Its structural shortfall in milk is unlikely to change for the foreseeable future.