Bitcoin falls below $30,000 as US monetary tightening and soaring inflation spook investors

China In-Focus — Shares of the Asian Giant Rise; Shandong port trader secures rare Russian oil deal; Toyota’s revenue slips

BEIJING (Reuters) – Chinese stocks rose on Wednesday as investors were reassured by signs of a decline in domestic COVID-19 infections, while U.S. President Joe Biden’s decision to consider eliminating tariffs from the Trump era on Beijing has further stoked risk appetite.

The CSI300 index rose 2% to 4,000.00 points at the end of the morning session, while the Shanghai Composite Index gained 1.6% to 3,085.43 points.

The Hang Seng Index added 1.7% to 19,971.18 points. China’s Hong Kong Enterprise Index gained 2.4% to 6,818.91.

China’s Shandong port trader strikes oil deal with Russia

China’s Shandong Port International Trade Group, a provincial government-backed commodity and oil trader, secured a rare shipment of Russian crude oil for arrival in eastern China this month, according to traders and a company statement.

It is the first such deal in which a Chinese company other than Beijing’s national oil giants buys oil directly from a Russian supplier, as global oil majors and traders phase out trading in Russian oil. to pressure Moscow over its invasion of Ukraine, which Moscow called a “special operation.”

In a statement posted to Shandong Port Group’s official Wechat account on Tuesday, the company said a crude oil shipment of 100,000 tons (730,000 barrels) loaded in recent days was expected to arrive in Shandong province amid this month.

Trade sources who closely monitor Russian oil sales to China said the size of the cargo and the shipping trip would indicate it is an ESPO blend cargo, the flagship export grade. of Russia from its Far Eastern port Kozmino.

A company representative declined to comment, but said it secured $85.5 million in credit from a Shanghai-based financial institution for the purchase, without mentioning the name of the lender.

Toyota’s revenue plummets

Toyota Motor Corp. reported a 33% drop in quarterly profit on Wednesday as the weaker yen and strong demand failed to offset the impact of production disruptions caused by a global chip shortage and China’s COVID restrictions .

The world’s largest automaker by sales posted operating profit of 463.8 billion yen ($3.56 billion) in the January-March quarter, well below an average estimate of 521.1 billion yen from seven analysts polled by Refinitiv.

It compares with a profit of 689.8 billion yen in the same period a year earlier.

Lower demand for cobalt, nickel and lithium in China

China’s COVID-19 outbreak is suppressing the country’s consumption of cobalt, nickel and lithium by disrupting transportation and cutting off battery manufacturing, state-backed research house Antaike said.

Auto factories across China have cut or even suspended production, Antaike said, as cities across the country battle to control the virus.

“There has been a relatively large impact on demand, in part due to a drop in battery orders and restrictions on domestic transportation,” the research house said.

One of the infection control measures has been to limit truck traffic.

Some producers of battery materials have cut production by 15 to 40 percent, sharply reducing demand for their inputs, such as lithium, according to Antaike.

Production of other materials has also declined, he added.

Refined cobalt production in April was down 7% from March and production of nickel cathodes last month was down 5.9% from March.

Despite the current headwinds, the consultancy expects demand for minerals to pick up as factory activity gradually picks up and because most automakers maintain their annual production targets.

He expects nickel prices on the London Metal Exchange to fluctuate in the near term in the range of $26,000 to $35,000 per ton and lithium prices to recover from current lows.

Factory inflation in China defies global surge

China’s factory gate inflation hit its lowest level in a year in April as state-led production efforts bolstered supply and COVID-19 lockdowns in key industries dampened demand .

Consumer prices rose at their fastest pace in five months as widespread shutdowns in major cities affected the supply of household items.

The producer price index rose 8.0% year-on-year, the National Bureau of Statistics said in a statement on Wednesday, slower than the 8.3% rise in March but faster than the growth in 7.7% announced by a Reuters poll.

“Producer price inflation will continue to decline over the coming quarters,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

The slower rise in the PPI was driven by government measures aimed at stabilizing commodity prices and increasing supply, BES official Dong Lijuan said in a separate statement.

China’s state planner on Tuesday called for stabilizing energy prices and accelerating oil and gas exploration and development.

Beijing has targeted daily coal production at 12.6 million tonnes this year and prioritized energy security following geopolitical uncertainties caused by the conflict in Ukraine.

China’s economy slowed sharply at the start of the second quarter as authorities imposed restrictions to stamp out COVID-19 outbreaks, with Shanghai currently in its sixth week of lockdown.

This led to a rise in the consumer price index, according to Dong.

The CPI rose 2.1% from a year earlier, the fastest pace in five months, partly due to food prices, which rose 1.9% from the previous year. previous year, compared to a decline of 1.5% in March.

Annual CPI growth remains well below the government’s 3% annual target this year, a sign that consumer price pressures remain relatively contained.

Tight restrictions weighed on China’s economy, with export growth slowing to its weakest level in nearly two years and factory activity contracting at a faster rate in April.

The central bank said on Monday it would step up support for the real economy, while closely monitoring domestic inflation and monetary policy adjustments in developed economies.

The PBOC reduced the amount of cash banks must hold as reserves in April with more modest easing measures expected.