CX Daily: Why the Wild Ride for Oil and Gas Prices Isn’t Over

Overseas institutional investors reduce their holdings of Chinese bonds for the first time since 2018

Energy /

Cover Story: Why the wild ride for oil and gas prices isn’t over

In a wildly volatile week, crude oil prices ended down last week after setting 13-year highs. But as the Russia-Ukraine war continues and ceasefire talks fail to make progress, the outlook is only for more volatility for energy and other commodities, industry experts said.

Crude oil futures in New York declined 5.5% last week and benchmark Brent crude prices fell 4.6%. The roller coaster reflected the imposition of Western sanctions on Russia after it invaded Ukraine Feb. 24 and the dilemma facing many European nations over how to replace supplies of oil and natural gas from Russia.

Russia is the world’s second-largest crude oil exporter after Saudi Arabia and second-largest natural gas producer after the U.S. Nearly 60% of its oil and 80% of its natural gas are exported to Europe, which relies on Russia for 30% to 40% of its energy.

Covid-19 /

China ramps up curbs in race to contain local omicron outbreaks

Authorities across China are ramping up virus control measures as the country continues to report thousands of daily new cases in a worsening new wave of local Covid-19 outbreaks mostly driven by the omicron variant.

China recorded 1,337 confirmed infections and 788 asymptomatic cases Sunday, according to the National Health Commission. The country recorded 3,122 local cases the previous day after logging more than 1,000 cases Thursday for the first time since the early days of the pandemic.

China tightens virus controls in Shanghai and Shenzhen

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Northeast China car manufacturing hub in lockdown as Covid cases surge

FINANCE & ECONOMY

Statues and humans wear masks on a street in Jiaxing, East China’s Zhejiang province, in February 2020. Photo: VCG

Economy /

Analysis: The seven factors that’ll shape China’s economy this year

China’s policymakers closed their annual “Two Sessions” parliamentary meetings Friday by reiterating an emphasis on stabilizing growth as they unveiled plans to address the key issues facing the economy amid geopolitical turmoil and the latest wave of Covid-19 outbreaks.

As the country works towards achieving a GDP growth target of around 5.5% this year — the lowest in more than three decades yet still above many market expectations — economists predict that the government will ramp up the implementation of more targeted macro policies while prioritizing stability.

Here are seven factors gleaned from the “Two Sessions” meetings that are expected to shape China’s economy in 2022.

Bonds /

Foreign investors’ China bond holdings fall for first time since 2018

Overseas institutional investors reduced their holdings of Chinese bonds in February for the first time since November 2018 as the escalating conflict between Russia and Ukraine fueled risk-off sentiment among global investors.

They held nearly 3.67 trillion yuan ($580 billion) of Chinese bonds at the end of February, a reduction of 67 billion yuan from January, data from China Central Depository and Clearing Co. Ltd. showed Tuesday. Their holdings of Chinese government bonds (CGBs) fell a net 35 billion yuan to 2.48 trillion yuan, and holdings of policy bank bonds dropped a net 29 billion yuan, the data showed.

China-U.S. /

Top Chinese diplomat to meet U.S. national security adviser in Rome

China’s top diplomat and Communist Party Politburo member Yang Jiechi was to meet U.S. National Security Adviser Jake Sullivan Monday in Rome, according to the official People’s Daily.

The two were to discuss China-U.S. relations and international and regional issues of common concern, the newspaper said. The White House confirmed the planned meeting.

China rejects U.S. assertion Russia asked for military aid

Delisting /

Five-stock delisting threat by SEC sparks rout of Chinese shares in U.S.

U.S.-traded Chinese stocks suffered the worst daily decline Friday since the global financial crisis after the Securities and Exchange Commission named five Chinese companies that could be removed from American stock markets for failing to meet audit requirements.

The Nasdaq Golden Dragon China Index, which tracks more than 90 Chinese stocks traded in the U.S., closed down 10.18% Friday, the largest decline since October 2008. That followed a 10% drop Thursday. The index has lost 34% this year after sinking 43% in 2021.

Quick hits /

China credit growth slows more than expected despite easing

Editorial: Steady growth remains dependent on reform and opening up

BUSINESS & TECH

Workers on the assembly line of a new-energy vehicle factory in Yuncheng, North China's Shanxi province, on Dec. 14, 2021. Photo: VCG

Metals /

In Depth: How spiking lithium prices might throttle China’s EV market

Lithium, the key ingredient in modern batteries, had a bumper year in 2021 as electric vehicle (EV) sales boomed globally. China alone shipped 3.5 million units, double the 2020 total.

With new tailwinds from a commodities rally driven largely by the war in Ukraine, the red-hot market for battery-grade lithium carbonate shows no sign of easing. The average spot price of the chemical element nearly doubled in the past three months after shooting up 434% last year. Lithium carbonate was trading at an average price of 502,000 yuan ($79,120) per ton as of Monday, data from metal research firm Shanghai Metals Market showed.

Speaking to Caixin, industry sources used words like “outrageous” to describe the current prices.

China’s nickel sector weighs risks after London halts trading

Saudi Aramco /

Saudi Aramco reboots $10 billion oil refinery venture in China

Saudi Arabia’s state oil company is reviving efforts to tap more deeply into China’s energy market with the resumption of a $10 billion refining and petrochemicals joint venture that was suspended nearly two years ago.

Saudi Arabian Oil Co., or Aramco, made a final investment decision to take part in a refining complex in Panjin, Northeast China’s Liaoning province, the company said Thursday. The project, with a 300,000-barrels-a-day refinery, an ethylene cracker and a paraxylene unit, is set to start operation in 2024.

IPO /

Chinese EV-battery giant files for Hong Kong IPO

One of China’s largest electric vehicle (EV) battery makers, CALB Co. Ltd., filed for an IPO in Hong Kong, a move that could capitalize on investor interest after China’s new-energy vehicle sales more than doubled in 2021.

The Jiangsu province-based company did not specify a timetable or how much it aims to raise but said it plans to use the proceeds to buy equipment and build plants as well as for trial production, according to its preliminary prospectus published Friday.

Quick hits /

SF Express halts deliveries from Hong Kong to mainland

Sanctions cost drone-maker DJI access to U.S. software design tools

Box office drops, flights canceled as Covid restrictions roar back in China

GALLERY

Shanghai, Shenzhen residents face strict Covid curbs