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☆ Morning Bid: Markets defy COVID blues
▼ + stars: | 2022-11-07 | by ( Clyde Russell | ) www.reuters.com time to read: +2 min

Elsewhere, The Guardian reported that British Finance Minister Jeremy Hunt is set to outline up to 60 billion pounds of tax rises and spending cuts next week, including at least 35 billion pounds ($39.56 billion) in cuts in the backdrop of the Bank of England's recession warning. Stock markets in the region chalked up gains across-the-board, underpinning Friday's rise in global shares after jobs data came in stronger than expected but also hinted at some slack in the tight American labor market. And staying on what the world's richest man is up to, Elon Musk laid out Twitter's mission, sparking debate on content accuracy. Twitter also updated its app to begin charging $8 for its sought-after blue check verification marks as it seeks to shore up revenue. China stocksReuters Graphics Reuters GraphicsKey developments that could influence markets on Monday:Economic data: Germany Sep industrial output, UK Halifax Oct house prices, Euro zone Oct PMISpeakers: ECB Board member Fabio Panetta speaksEuropean earnings: RyanairReporting by Anshuman DagaOur Standards: The Thomson Reuters Trust Principles.

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.

☆ China coal imports slip from 10-month high in Oct as COVID curbs crimp demand
▼ + stars: | 2022-11-07 | by ( Muyu Xu | Clyde Russell | ) www.reuters.com time to read: +2 min

SINGAPORE, Nov 7 (Reuters) - China's coal imports slipped in October after hitting a 10-month high in September, as Beijing's ultra-strict COVID-19 restrictions dampened demand for the power generation fuel. Coal arrivals in October totalled 29.18 million tonnes, up 8.3% from a year earlier, data from the General Administration of Customs showed on Monday. Coal imports hit 33.05 million tonnes in the prior month. Coal-fired power and heating plants typically start to build inventory in October. But a stronger dollar is making imported coal more expensive for Chinese buyers and eating into profit margins at power plants.

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.

A preferred solution is to accelerate the energy transition by adding more renewable generation, and crucially, more storage to smooth out the inherent variability of technologies such as wind and solar. At the 121 Mining Investment conference in Sydney on Wednesday the problems were put into focus by the group largely being neglected in the energy transition, the miners and project developers. None of this bodes well for increasing the speed of the energy transition. Register now for FREE unlimited access to Reuters.com RegisterEditing by Christian SchmollingerOur Standards: The Thomson Reuters Trust Principles. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

LAUNCESTON, Australia, Sept 29 - If there is one thing the oil and coal industries can agree upon, it's that the solution to the current global energy crisis is more fossil fuels. The Russian invasion of Ukraine on Feb. 24 has been the catalyst for players in the global energy industry to re-think priorities. For the oil, gas, and coal sectors what they see as the problem is perennial under-investment in new oil and gas fields and new mines. In other words, the solution to the current fossil fuel crisis is more fossil fuels, but this time just from more reliable countries and not Russia. But the point is the money is likely to flow at a faster rate into alternatives to fossil fuels.

Refiners, insurers, shippers and traders would be able to deal in Russian crude and products if they adhere to the price cap and its associated compliance measures. For argument's sake let's assume a Brent price of $80 by December when the ban comes into effect, and a price cap for Russian crude of $60. However, the United States and Europe may actually not mind cheating on the price cap, depending on how the money is split up. More tankers will be required to ship Russian crude given an increase in voyage times if the crude and products go to Asia rather than Europe. The oil industry would likely prefer that Europe and the United States don't place restrictions on Russian crude, but this currently isn't an option from a political perspective.

But despite the decline in oil imports, China has actually been building up inventories, as crude imports and domestic production has been exceeding the volume of refinery processing. But an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output. Crude imports were 9.5 million bpd in August, based on official data, up 8.1% from July's 8.79 million bpd in July, but they were still down 9.4% from August 2021. Domestic oil output was 3.99 million bpd in August, down a touch from July's 4.03 million bpd. Refinery throughput was 12.64 million bpd in August, up slightly from July's 12.53 million bpd, which was the lowest daily rate since March 2020.

Representatives of coal miners in Indonesia and Australia, the world's two largest exporters of thermal coal, were ebullient at the Coaltrans event, but also cautious that the current windfall is unlikely to last beyond 2023 or 2024. In theory both of these solutions do offer some hope for coal miners, but then the main problem comes in. For higher energy Australian thermal coal the cost of the offsets is even less, given its current high price, coming in at just over 2%. Also, as coal miners, and other polluters, compete for offsets, the price will invariably rise, thereby adding to the cost. For exporting coal miners, there is probably a narrow path to remaining in business for the long term.

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