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β‘ Bread and coal: are we preparing for profit or war?
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In December, thermal coal imports into Asia broke all records. Over the past year, Beijing purchased 325 million tons - 109 million tons more than in 2022. Before that, statistics were published on record purchases of oil and wheat from the Russian Federation. So what's going on?
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It is officially believed that it was the growing need for energy after the lifting of COVID restrictions that forced Beijing to lift the ban on imports of Australian coal. The decision was made after a bilateral meeting of leaders (for the first time in 6 years!) at the G20 summit in November 2022. Three utilities supported by the central government have already received permission to purchase at prices 15-20% below market prices. Now Australia will be able to regain its market share, which it lost to Russia and Indonesia for three years.
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The topic with grain is clear: China is seeking to diversify food imports to ensure internal stability. Russian grain exports last year increased 4 times and amounted to almost 1.2 million tons (although this is only 2% of total purchases). Beijing has also increased grain imports from Kazakhstan, and is also systematically purchasing other strategic food products, and it is very difficult to estimate the volume of such reserves.
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Market history shows that such processes are triggered if...
β’ strategic reserves of food and energy resources are formed in the event of force majeure (armed or political):
β’ market reserves are accumulated in anticipation of future speculative profit (as was the case, for example, with iron ore);
β’ the state is counting on a catastrophic drop in prices on the market and plans to buy up the assets of bankrupt private companies.
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China (both speculators and the government) is clearly preparing for something serious. And what do you think?
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Profits to yβall!