China Boosts Spending on Russian Energy to $35 Billion Since War


China continues to expand its reliance on Russian energy, with purchases of crude, oil products, gas and coal rising to $35 billion since the war in Ukraine began, from about $20 billion a year earlier.

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(Bloomberg) — China continues to expand its reliance on Russian energy, with purchases of crude, oil products, gas and coal rising to $35 billion since the war in Ukraine began, from about $20 billion a year earlier.

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Although import values have been inflated by the global spike in energy prices due to the conflict, China is still taking more volumes, sometimes at discounted rates, from its strategic ally, according to the latest customs figures covering March through July. The increase comes as other countries shun Russian goods as punishment for the invasion.

Imports in July included a record haul of Russian coal, which rose 14% on year to 7.4 million tons, with coking coal for the steel industry hitting 2 million tons, an increase of 63%. Russia is now China’s top supplier of the fuel, supplanting Indonesia after the Southeast Asian nation deterred buyers by raising prices. And while crude imports from Russia declined from the prior month to 7.15 million tons, they were still 8% higher than a year ago and the nation remains the top origin for Chinese refiners. 

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Imports of liquefied natural gas also fell from June to about 410,000 tons, although they were 20% higher than a year ago. The volumes exclude imports via pipelines, which haven’t been reported by customs since the start of the year, but are the main channel to transport the fuel from Russia to China.

Despite a slowing economy, China raised its spending on Russian energy to $7.2 billion in July, from $4.7 billion in the same month last year, with shipments making up about 70% of total imports from Russia. Among other commodities:

  • Refined copper imports fell 20% on year to 20,396 tons
  • Refined nickel imports dropped 10% to 3,286 tons
  • Aluminum imports rose 16% to 39,053 tons
  • Palladium imports climbed 29% to 2,350 kilograms
  • Wheat imports jumped 52% to 3,314 tons

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Events Today

(All times Beijing unless otherwise shown.)

  • China sets monthly 1 and 5-year loan prime rates

Today’s Chart

China is boosting monetary support — with the greatest urgency directed at the metals-intensive property market. The deeper cut in the five-year loan prime rate, which banks use to price mortgages, relative to the one-year rate (short-term corporate loans) highlights that priority, says Bloomberg Economics. 

On The Wire

China’s Sichuan extended industrial power cuts and activated its highest emergency response, adding to manufacturers’ woes in the region as they shut down factories. For more on the impact of the extreme weather:

  • China’s Copper Market Tightens on Worsening Power Crunch: Chart
  • Diesel Demand in Sichuan Climbs After Power Cuts, OilChem Says
  • China Farming Stocks Gain as Drought Seen Hurting Grain Supply
  • Goldman Sees Rice, Aluminum, Lithium at Risk in China Drought
  • China Power Outages Less Serious Than 2021 Crisis: Minsheng
  • Taiwan Solar Cos Raise Prices Amid Sichuan Power Crunch: EDN
  • Watch Producers as Sichuan Said to Extend Industrial Power Cuts
  • China’s Drought-Stricken Power Supply Leaves Factories at Risk
  • Power Crunch Threatens Growth, Reinforces Weak Yuan: China Today

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Other items:

  • China Gas Growth to Slow This Year as LNG Imports Contract: NEA
  • Goldwind Shares Plunge Most Since 2018 After 1H Net Income Drops
  • China’s Urban Rail Push to Backstop Construction, Train Demand
  • HK & China Gas Falls; Citi Says Stock Yield Not Attractive
  • ENN Energy Dives; Citi Says 1H Core Profit Ex-LNG was “Not Good”
  • China EV Registrations Fall 15.9% M/m in July
  • Traders See More Earnings-Day Swings for PetroChina, China Life

The Week Ahead

Tuesday, Aug. 23

  • EARNINGS: Chalco, Beijing Shougang, CATL, Sinofert, Kunlun Energy

Wednesday, Aug. 24

  • EARNINGS: Longi Green, Hoshine Silicon, CGN Power, GEM

Thursday, Aug. 25

  • EARNINGS: PetroChina, Cnooc, China Oilfield Services, China Coal Energy, JA Solar, Trina Solar, EVE Energy, Jiangxi Copper, Hesteel
  • USDA weekly crop export sales, 08:30 EST

Friday, Aug. 26

  • Bloomberg China economic survey for August, 10:00
  • China weekly iron ore port stockpiles
  • Shanghai exchange weekly commodities inventory, ~15:30
  • EARNINGS: Sinopec, China Shenhua, China Resources Gas, Gotion High-Tech, China Hongqiao, Angang Steel

Saturday Aug. 27

  • China industrial profits for July, 09:30

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