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Russian crude export volumes have held up since Moscow's Feb. 24 invasion of Ukraine, but only because China and India have stepped in to buy steeply discounted Russian oil. But while China's crude imports have been rising, a greater share appears to have been captured by Russia. If imports from Russia are excluded, it shows that June imports were 6.97 million bpd and November's were 9.52 million bpd. The increase for imports from all sources in November over June was 2.67 million bpd, but the total ex-Russia was 2.55 million bpd. This raises the possibility that Russia's share of China's crude imports will rise even higher.

The question now is whether 2023 will see China reassert its dominance as the main driver of commodity markets. There were differences in China's 2022 commodities imports, and the trends established may persist for a while yet. However, the trend for crude oil imports and product exports shifted in the last quarter of 2022. Crude oil imports rose 4% in December from the same month a year earlier, reaching 11.3 million bpd. It's likely that they will want to ramp up purchases in 2023 to meet rising domestic demand from the re-opening economy and ongoing fuel export quotas.

Total global LNG imports rose to 409 million tonnes last year from 386.5 million tonnes in 2021, according to data from Refinitiv, while figures from commodity analysts Kpler showed a slightly lower 400.5 million tonnes, up from 379.6 million tonnes. China imported 64.44 million tonnes of LNG in 2022, down 19.4% from the previous year, according to Kpler data. Much of the increase was met by supply from the United Stares, with imports rising to 52.06 million tonnes from 21.5 million tonnes in 2021. However, it's worth noting that Europe's imports of Russian LNG hit a record high of 15.95 million tonnes in 2022, up from 13.46 million tonnes in 2021. Given Europe's increasing dependence on LNG as Russian pipeline gas supplies are curbed, it may prove challenging for the continent to halt, or even cut back, on Russian LNG.

The answer is while any increase in China's crude oil imports may drive crude oil prices higher, a corresponding increase in fuel exports may weaken regional refining margins. In other words, there are many moving parts to the overall balance between China's crude import demand and regional fuel markets. Another point is that so far there is little evidence that China's crude oil imports are recovering. China doesn't disclose its stockpiles, but it likely added to inventories in 2022 even as total crude oil imports declined. China's crude oil demand isn't necessarily a one-way bullish street, even if the re-opening from COVID-19 is a success.

The first, and most important, is that Australian coal will struggle to compete on price in China, especially thermal grades used to make electricity. Once the informal ban came into effect, Australia's share of China's imports dropped to zero by early 2021. China's imports of Russian thermal coal have remained solid, with some seasonal variations, since then and were 2.96 million tonnes in December, according to Kpler. The question is whether Australian coal miners can compete on price with Russian thermal supplies, and the answer is probably not. Add in a likely price disadvantage and it's hard to see Australian thermal coal charging back into China.

LAUNCESTON, Australia, Dec 20 (Reuters) - The folly and futility of forecasting commodity prices was rammed home this year, with Russia's invasion of Ukraine upending markets and rendering all prior expectations largely irrelevant. The first thing to note about 2022 was that while commodity prices were shocked by Russia's Feb. 24 attack on Ukraine, many are ending the year little changed or weaker than where they concluded 2021. This dynamic is probably already on display in crude oil, the world's most important commodity, with Brent futures poised to end the year little changed from the last trading day of 2021. In contrast to LNG and coal, metals have largely struggled in 2022, notwithstanding the bump from the conflict in Ukraine. The exception is lithium, with battery-grade lithium hydroxide up 132% so far this year as demand from vehicle and battery makers surge.

Of this amount, hydrogen projects accounted for A$266 billion of potential investment, the largest single contributor to the total. The total of proposed hydrogen and new energy projects is pegged at about A$308 billion in 2022, up about A$100 billion from the end of 2021. Australia's traditional powerhouse commodity exports of iron ore, liquefied natural gas (LNG) and coal are still attracting significant investment interest. In contrast, oil and gas projects at the committed stage total A$46 billion, while five ventures worth A$2.4 billion were completed in the period under review. Coal projects worth A$7.6 billion were at the committed stage and three ventures worth A$2.5 billion were finished in the year to Oct. 31.

One is that China is continuing to build crude oil stockpiles, even though its refinery processing rates have risen strongly in recent months. But despite the solid gain in refinery processing, it appears that China is still building up crude oil inventories in commercial or strategic storage tanks. The total volume of crude available from imports and domestic production in November was 15.46 million bpd, consisting of imports of 11.37 million bpd and local output of 4.08 million bpd. China imported an estimated 1.80 million bpd from Russia in November, according to Refinitiv Oil Research, exceeding the 1.69 million bpd supplied by Saudi Arabia. China total crude available vs refinery runsDIFFERENT CRUDE DRIVERSOverall, there are several dynamics at work in the outlook for China's crude oil imports.

The centre-left federal government of Prime Minister Anthony Albanese has played its cards, announcing on Dec. 9 plans to legislate a year-long price cap for wholesale natural gas and thermal coal in the country's populous eastern states. Australia vies with Qatar and the United States for the title of the world's biggest exporter of liquefied natural gas (LNG) and is the second-biggest shipper of thermal coal after Indonesia. Australia still generates about 50% of its electricity from thermal coal, although this share is shrinking rapidly as the country installs renewables such as solar, wind and battery storage. The ruling Labor Party's plans call for a price cap of A$12 ($8.15) per gigajoule (GJ) for gas and A$125 a tonne for thermal coal, with the government saying it will support any coal miner whose costs exceed the price cap. The gas industry probably would have been better served by asking some more relevant questions, such as whether a price cap is the best method of delivering relief to consumers.

LAUNCESTON, Australia, Dec 8 (Reuters) - China's imports of major commodities in November appeared unambiguously strong, but delving into the details shows a more nuanced picture amid ongoing uncertainty. Part of the jump in crude oil imports can be explained by a surge in exports of refined fuels. Shipments of products rose to 6.14 million tonnes in November, the highest since April last year and a jump of 37.7% from October and 46.4% from November 2021. MIXED PICTURESCoal imports also looked strong in November, rising to 32.3 million tonnes from October's 29.18 million, the gain being attributed to utilities ensuring sufficient supplies for winter. It was a similar story for iron ore imports, with a solid 10.7% gain in November to 98.85 million tonnes, up from October's 94.98 million.

Saudi crude is mainly sold under long-term contracts, but these usually contain clauses that allow for variations in volumes delivered, either at Aramco's behest or the request of the clients. This dynamic can be seen in China this year, with the world's biggest crude importer dropping imports from Saudi in November, but boosting those from Russia and Angola. China imported 1.72 million barrels per day (bpd) from Saudi Arabia in November, down from 1.87 million bpd in October, according to data compiled by Refinitiv Oil Research. However, China's imports from Russia rose to 1.90 million bpd in November from October's 1.82 million bpd, while those from Angola jumped to 680,000 bpd from 480,000 bpd the prior month. Russian crude will have to be offered at a discount, possible to the point where the $60 a barrel price cap becomes irrelevant.

That is what OPEC+ has chosen to do with the crude oil market. There are several factors currently creating uncertainty in global crude oil markets, and some are likely to push and pull prices in opposing directions. Much of the focus in global oil market has been on the G7 price cap and the EU ban on Russian crude oil imports, both of which commence today. Stronger economic growth and easing COVID-19 restrictions in China are bullish for crude oil demand, but neither of these is locked in and the outlook is still uncertain. Overall, it's now a waiting game for OPEC+ and the global oil market to see how the various uncertainties pan out in reality.

China, the world's largest crude oil importer, and India, the third-biggest, have increasingly turned to Russian crude this year, buying cargoes at steep discounts as Moscow sought to keep up export volumes after Western countries shunned its oil. Chinese refiners have begun slowing their purchases of Russian crude for December arrivals, according to traders and industry players in China. The lower volumes for December follow strong imports by India of Russian crude in recent months. It's likely that both countries will be keen to buy Russian crude, especially if it comes at a steep discount compared to grades from the Middle East and Africa. Currently, much of the crude China buys from Russia comes from the eastern ports.

The LNG industry argues that all of those of measures would result in lower investment and lower natural gas production over time, which would ultimately lead to higher prices. The Russian invasion of Ukraine and the subsequent surge in energy prices amid fears over the loss of Russian exports of natural gas, LNG, crude oil and coal has provided Australia's LNG exporters with windfall revenues. But it has also led to higher prices in the domestic market, and calls from businesses and households for action to make LNG more affordable. The LNG industry is happy to meet one of those demands, namely ensure sufficient supply is offered to domestic consumers before being made available to the LNG exporters. What gas consumers want is capped prices and guaranteed volumes.

LAUNCESTON, Australia, Nov 21 (Reuters) - Iron ore prices are gathering steam as confidence over the outlook for China's steel demand increases, outweighing bearish factors such as potential winter production curbs and India lowering iron ore export taxes. Iron ore inventories at Chinese ports dropped to 135.45 million tonnes in the week to Nov. 18 from 136 million the previous week. China iron ore imports vs spot priceIRON ORE IMPORTSNovember is shaping up to be a strong month for iron ore arrivals, with commodity analysts Kpler estimating seaborne imports of 103.9 million tonnes, while Refinitiv estimates a higher 106 million tonnes. India may also start exporting more iron ore cargoes after the government scrapped some taxes, especially those on lower-grade material. Even if India does manage to resume exports, it's likely to have only a limited impact on prices for lower grades of iron ore, such as 58% and below.

However, the volume of crude available to refineries was 14.22 million bpd, consisting of imports of 10.16 million bpd and domestic oil production of 4.06 million bpd. China exported 4.46 million tonnes of refined products in October, equivalent to around 1.15 million bpd, using the BP conversion rate of 8 barrels to one tonne. Fuel exports are expected to remain at elevated levels in November as refiners use up their remaining quotas for 2022. China's November crude imports are estimated at 11.46 million bpd by Refinitiv Oil Research, which would be an 11-month high. Overall, the recent strength in China's crude imports may not be long-lasting, especially if new refined fuel export quotas aren't granted.

There are signs, however, that LNG demand is ticking higher ahead of winter, with commodity analysts Kpler estimating November imports in both Asia and Europe to rise. LNG imports by Asia, Europe vs JKM priceEUROPE BUYING AGAINEurope's imports are expected to reach 11.49 million tonnes in November, which would be the second-highest in Kpler's records behind the 11.55 million tonnes in January. Europe's LNG imports were 10.13 million tonnes in October, which was the first time since May they had exceeded 10 million tonnes in a month. The United States remains Europe's biggest supplier, with imports of 4.66 million tonnes expected in November, up from 4.17 million in October. Europe's imports of Russian LNG are continuing, with arrivals of 1.32 million tonnes in November, up from 1.05 million in October.

While supply concerns have eased, the main dynamic behind the price retreat has been weakness in the residential construction sector in China, which takes about 70% of iron ore that is exported by sea. Given that construction accounts for more than a third of China's total steel demand, the ongoing weakness in residential property has been a cloud over iron ore's outlook. A recovery may be on the cards in November, with commodity analysts Kpler estimating that seaborne iron ore imports will be around 96.87 million tonnes. But the overall message from iron ore imports this year is that they will likely be slightly lower in 2022 than last year. While the market tends to focus on weakness in residential property construction, total construction has been holding up far better.

LAUNCESTON, Australia, Nov 10 (Reuters) - Prices for seaborne thermal coal have started to drop as fears of a winter energy crunch ease, but the rate of decline has varied across the different grades of the polluting fuel. That means it reflects only a small percentage of the total seaborne thermal coal market. A better reflection of Australian coal is provided by the Argus API5 assessment for 5,500 kcal/kg coal , which is bought by customers in India and other Asian nations, such as Vietnam. Russia exported 10.93 million tonnes of thermal coal via ships in October, the most since July's 11.66 million, according to data compiled by commodity consultants Kpler. Overall, the seaborne thermal coal market is showing the prices with the most exposure to Europe are declining, while those linked mainly to China are holding up.

LAUNCESTON, Australia, Nov 8 (Reuters) - China's imports of crude oil rebounded in October, but the details aren't as strong as the headline number suggests. PetroChina started trial operations at a 200,000 bpd crude unit at its new refinery in Guangdong, while Shendong Petrochemical is also starting operations at its new 320,000 bpd plant in Jiangsu province. This appears to have resulted in China boosting imports from the kingdom, with Refinitiv Oil Research estimating that October arrivals were 1.91 million bpd, up from 1.84 million bpd in September. Rising exports of refined products are also acting as a spur to crude imports, with 4.46 million tonnes of fuel being shipped out in October. This was down from September's 1.5 million bpd and August's 1.23 million bpd, but it's worth noting that the past three months have been strongest since July last year.

Last winter, the spot price peaked at $48.30 per mmBtu, in late December, before dropping to $23 by late January. What the term structure is signalling is that LNG demand may be fairly constant over the year, rather than rising and dropping with the change in seasons. LNG imports by Asia, Europe vs JKM priceFLOWS EVEN OUTCertainly, the flows data appears to be supporting the view of steady demand in both Asia and Europe. Total Asian imports were 20.61 million tonnes in October, little changed from September's 20.25 million, according to data compiled by Refinitiv. It's also worth noting that October's imports were down 6.3% from the 22 million tonnes from the same month last year.

LONDON, Oct 26 (Reuters) - A rebound in China's refinery processing and fuel exports in September was still not enough to prevent the world's biggest crude oil importer from adding to its stockpiles. However, the total volume of crude available to refineries was 13.88 million bpd, comprising imports of 9.79 million bpd and domestic output of 4.09 million bpd. This means that the volume of crude available was 60,000 bpd more than what was processed, implying a small build in crude oil inventories despite the recovery in refinery throughput. The small build in September was a marked contrast to August, when about 850,000 bpd were added to commercial or strategic stockpiles. While Chinese diesel exports may result in a lower profit margin for producing the fuel at other refiners in Asia, it's likely to remain highly profitable.

Trade flows have been adjusting, with Western buyers shunning Russian crude and products, and a formal European Union ban on crude coming into effect in December and on products in February. Russia has overtaken Saudi Arabia as China's top supplier of crude oil, and China has also boosted imports of Russian coal. There is less Russian nickel in the LME system, perhaps about 5% of the total, but Russian aluminium makes up closer to a quarter of the total. China is a net exporter of aluminium, meaning there would have to be a significant price incentive to effectively "churn" metal through China. Overall, whatever emerges from the LME's discussion paper on Russian metal, the likelihood is that 2023 will see some form of disruption to the established ways of doing business.

Europe has been the major beneficiary of China cutting its LNG imports in 2022, as the gas-starved continent has been able to buy both spot cargoes that China didn't take, as well as some contracted cargoes that China re-sold. Register now for FREE unlimited access to Reuters.com RegisterSuch a move will likely see China's LNG imports rise in coming months, but they are still likely to be below the levels that prevailed last winter. China has in past years increased LNG imports over the winter period by bidding for spot cargoes, with Kpler reporting imports of 7.01 million tonnes in November last year, 8.21 million in December and 7.18 million in January. Even though spot LNG prices in Asia have been dropping in recent weeks, they are still more than 50% above that level, meaning importing spot cargoes means heavy losses. For the early part of the upcoming winter, it may be the case that Europe doesn't buy heavily in the spot LNG market, meaning more cargoes will be available in Asia.

There is still scope for positive economic news to come out of the gathering, but the main impact is that there is little immediate upside to China's demand for commodities. China is also likely to be looking at ways of reducing its reliance on imported crude oil, and the energy transition does offer some answers. Rising sales of electric vehicles likely means China's demand for battery metals such as lithium, cobalt and nickel is likely to increase over the longer term. Iron ore, battery metals, copper and natural gas are commodities where China's demand is likely to substantially exceed available domestic supply. An accelerated energy transition is also likely to boost demand for these commodities, while cutting demand for crude oil and coal.

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