Inside a Quiet Buildout of Reserves
From the air, a cluster of giant tanks at Dongjiakou on the Shandong coast looks like an orderly array of metal drums. These are floating roof tanks, built so the roof rises with the liquid level to curb vapor losses and reduce fire risk. In recent months the site has become a showcase of speed. Satellite and port data show that roughly 10 million barrels of crude were added since mid January, lifting inventories at the site to about 24 million barrels. The complex is barely two years old, already more than half full, and is now one of the largest oil storage hubs on China’s coast.
That pace is not an isolated case. Across fuels, metals and food, China has been filling warehouses, tanks and caverns in a methodical campaign to build buffers against shocks. The work is spread across coastal tank farms, inland depots and underground caverns. It is managed by a small circle of agencies and state firms, it is carried out with limited public disclosure, and it has accelerated through 2024 and 2025. The result is a reserve system that is deeper and wider than most foreign observers assumed even a few years ago.
What Beijing Says It Is Doing, and Why Now
China’s top economic planner has formally said it will accelerate annual stockpiling of strategic goods. The plan covers fuels, grain and a growing list of critical minerals. It also calls for faster construction of new storage for petroleum, grain and other materials. The signal is clear. Beijing intends to broaden its reserves and fill them faster.
China’s National Development and Reform Commission (NDRC) set the tone in its latest policy outline. The commission pledged to move faster on yearly targets for building reserves and to refine planning for exploration, production and storage of key minerals.
“We will move faster to fulfil the yearly task of stockpiling strategic goods as we work to expand the scale of reserves.”
The drivers are practical. The country consumes a large share of the world’s raw materials but lacks oil, gas and many metal ores of its own. It has one fifth of the world’s population but less than one tenth of arable land, and water is scarce in many regions. That leaves China exposed to shipping snarls, sanctions risks and trade disputes. The pandemic, the war in Ukraine and recurring tariff fights highlighted those weak points. Stockpiles help cushion supply shocks and smooth prices at home.
There is also a timing element. Storage capacity has expanded, oil prices have been attractive at times, and domestic demand has slowed in several heavy industries. That mix creates space to buy cheaply, park supplies and prepare for future needs while construction crews keep adding tanks and warehouses.
Oil at the Center of the Strategy
Crude oil sits at the heart of the reserve buildout. China is the largest importer of crude, and about 70 percent of the barrels that feed its refineries arrive by sea. That reliance on tanker routes such as the Strait of Malacca is a strategic vulnerability in any crisis. A bigger, more flexible oil reserve reduces that risk. It also gives officials a tool to stabilize domestic fuel markets by buying on dips and, when needed, releasing barrels to cool price spikes.
New storage sites through 2026
Construction is racing ahead. Public records on environmental approvals, company postings and local announcements point to at least 11 new oil storage sites slated to come online in 2025 and 2026. Together they add about 26.8 million cubic meters of capacity, roughly 169 million barrels. Three sites are inland in Shaanxi and Yunnan. The rest are spread along the east and south coasts to connect with import terminals and refineries.
The buildout sits on the books of national oil companies, mainly Sinopec and CNOOC. Many tanks are described as commercial storage. In practice they are part of a single emergency system. A new law adopted in January brought government strategic bases and company inventory under one national reserve definition. It also requires state firms to hold supervised inventory that officials describe as a “social responsibility” reserve.
How big are the reserves now?
Estimates vary because China does not publish regular updates. The last official tally for state oil reserves was released in 2017. Private trackers now put total onshore crude held by state entities and in commercial tanks in a wide range, from about 735 million barrels to nearly 800 million barrels as of early autumn 2025. That does not include four underground storage sites with space for roughly 110 million barrels.
At the core sits a strategic petroleum reserve that outside analysts pegged at around 290 million barrels in mid 2024. Several industry sources say policy makers want to go much bigger. Targets discussed in the sector range from enough storage to cover three months of net imports to an ambitious six months, which would imply more than 1 billion barrels and, at the high end, close to 2 billion barrels of capacity over time.
Monthly buying has been brisk. Energy consultancies estimate that during 2025 an average of roughly half a million barrels per day has been moving into storage. Some of that crude went to new sites like Dongjiakou, where tanks that came online recently have been filling fast. When global prices dipped below 70 dollars a barrel, the pace of purchases quickened. With more storage coming online in 2026, the system has room to take in additional barrels if officials wish to keep building buffers.
Beyond Oil, a Wider Net of Critical Commodities
Reserves extend far beyond fuels. The National Food and Strategic Reserves Administration manages state stockpiles of grain and a growing basket of industrial materials. In 2025 the agency sought prices and bids to add cobalt, copper, nickel and lithium to official holdings. These are the inputs for batteries, motors, grids and electronics. China refines a large share of many of these materials but still depends on foreign mines for ore and concentrates.
A long term strategy stretches back to the late 1980s. It pairs stockpiles with overseas investment in mines, equity ties to producers, and long contracts that lock in supply. The approach expanded after the 2008 financial crisis and gathered fresh urgency during the pandemic and the war in Ukraine. Importers lifted purchases when prices eased, and inventory levels of some metals and energy materials rose across 2023 and 2024.
Copper shows why these reserves matter. The metal is central to electric vehicles, renewable power and the modernization of transmission grids. Supply growth has been uneven in top producing countries, while long lead times and higher costs slow new projects. When China builds copper stocks during periods of market calm, it is hedging against future tightness and freight disruptions that could ripple through its factories and power sector.
The same logic applies to food. China is self sufficient in rice and wheat, but it is the largest importer of soybeans and brings in corn when harvests fall short. Grain reserves help stabilize prices and feed supplies during bad weather or external shocks. In parallel, officials have telegraphed plans to expand natural gas storage toward a goal of as much as 85 billion cubic meters by 2030 to cover winter demand swings.
How the Reserve System Works
The reserve system is centralized but relies on a web of state companies. The National Food and Strategic Reserves Administration sets policy and supervises holdings. State energy firms and commodity traders operate many sites and manage day to day logistics. Since January, commercial inventories that meet government standards are treated as part of the national reserve. That change tightens control and increases the pool of barrels and tons that can be mobilized in an emergency.
Storage comes in several forms. Above ground tank farms store crude and refined products near ports and refineries. Underground caverns add secure capacity out of sight and closer to inland consumers. Large grain depots sit near rail and river hubs. Managers rotate stocks to maintain quality and reduce spoilage. When domestic prices surge, authorities can auction small volumes from metal or grain reserves to cool the market. Details of volumes, sites and timing are closely held, which encourages speculation and sometimes confuses signals to the market.
From floating roofs to caverns
Floating roof tanks, like those at Dongjiakou, are a workhorse of modern oil storage. The roof rests directly on the liquid. As the level rises, the roof lifts, which reduces the build up of vapor, limits corrosion and lowers the risk of ignition. For long duration storage, operators also use salt caverns and mined rock caverns. These facilities offer large capacity at lower cost per barrel and are harder to disrupt during a crisis.
Global Market Effects
China’s steady buying has changed trading patterns. By lifting crude imports above immediate refinery runs, the reserve system has absorbed surplus barrels at moments when producers were easing supply curbs. Market analysts expect this trend to continue into 2026. The United States Energy Information Administration has said Chinese stockbuilding will continue to support global prices into next year.
The effect is not limited to oil. Large purchases of refined copper, aluminum and nickel can push futures prices higher and tighten time spreads. When importers switch between concentrates and refined metal, it can shift treatment charges and alter the flow of material through smelters. Seasonal surges in iron ore and coal arrivals, even during weak factory output, underscore that inventory cycles and reserve building now play a larger role in China’s commodity trade.
Traders and producers around the world watch these flows because they influence shipping rates, storage costs and the shape of futures curves. When reserve buying is heavy, it tends to narrow discounts for prompt supply and lift prices for later delivery. When Beijing pauses and releases inventories, the effect can flip. The opacity of the system keeps the market guessing.
That uncertainty has bred caution among market veterans. Ilia Bouchouev, a senior research fellow at the Oxford Institute for Energy Studies and a former oil trader, put it plainly when asked how long the current buying could last.
“Nobody has a crystal ball about the duration of Chinese buying for its strategic storage.”
Geopolitics and Risk Calculus
Strategists read the reserves through a geopolitical lens. If tension around Taiwan worsened, seaborne supplies through choke points like the Strait of Malacca could be at risk. Sanctions on finance and shipping could slow deliveries. China imports far more oil than it produces, so a larger reserve reduces the risk of a sudden fuel shortfall that could ripple across transport, industry and the military.
Policy makers have also weighed the risk of extended trade friction with the United States and Europe. New tariffs on Chinese goods are a recurring threat. Energy flows from key partners carry their own uncertainties. Russia faces Western sanctions. Iran is under pressure and exports can be disrupted. Diversification through pipelines and long contracts helps, yet the reserve system is the most tangible insurance policy.
Inland storage sites add another layer of security by keeping more supply away from the coast. Domestic fuel production, the spread of electric vehicles and rapid growth in renewable power also reduce exposure to crude over time. These trends matter, but oil will remain essential for aviation, shipping, heavy industry and logistics for many years. The calculus in Beijing points to more storage, not less.
Risks, Costs and Limits
Reserves are expensive to build and maintain. Tanks, caverns and depots require land, steel, concrete and skilled crews. Inventory ties up capital and incurs financing costs. Managing quality, especially for grain and some metals, takes constant care. Leaks, contamination or poor rotation can turn a buffer into waste.
There are macroeconomic trade offs as well. When economic growth slows, stockpiling can flatter import data while factory output lags, creating mixed signals for investors. Buying spurts can support global prices at times when consumers everywhere would prefer relief. If the government misjudges the cycle and buys heavily into a rally, taxpayers bear the cost. The opacity that protects security also makes it harder for the market to plan.
Those limits explain why China often buys when prices are weak and why it rarely announces the size of its reserves. The aim is practical. Build capacity, fill on dips, and keep enough optionality to respond to shocks. The evidence from the past two years suggests that approach has worked as designed.
Key Points
- Beijing has accelerated stockpiling of fuels, food and critical minerals while expanding storage capacity nationwide.
- Oil is the centerpiece, with 11 new sites due in 2025 and 2026 adding about 169 million barrels of storage including inland bases.
- Private trackers estimate 735 to 800 million barrels now sit onshore in state and commercial tanks, plus about 110 million barrels of underground capacity.
- A January law integrated commercial and state holdings into a single national reserve and requires state firms to hold supervised “social responsibility” stocks.
- Officials plan to grow reserves of metals like copper, nickel, cobalt and lithium, and to lift natural gas storage toward as much as 85 billion cubic meters by 2030.
- China’s reserve buying has helped support oil prices into 2026 and is reshaping flows in metals and bulk commodities.
- The strategy is driven by import dependence, shipping and sanctions risks, and the desire to stabilize domestic markets.
- Costs, secrecy and the chance of buying at the wrong time are real risks, yet the system has delivered resilience through recent shocks.
