US President Trump’s claim that a trade agreement with China was “very, very close” has boosted the market. But data on China’s imports of U.S. oil, liquefied natural gas (LNG) and coal show that once trade flows are cut off, it will be difficult to recover.

Data released by China Customs on Monday showed that China imported zero crude oil from the United States in January for the second consecutive month. China imported 245,616 barrels of crude oil per day from the United States in 2018, an increase of 25% over the previous year.

Crude oil was originally one of the commodities that could effectively reduce China’s trade surplus with the United States, but the emergence of Trump trade tariffs led to the strangulation of crude oil trade between China and the United States, although crude oil was not affected by Beijing’s retaliatory measures.

Despite Trump’s conciliatory remarks and the extension of negotiations between senior Chinese and American officials, there are few signs that trade activity is resuming.

Refinitiv’s ship tracking and port data show that no U.S. crude oil is expected to arrive in China in February and March. Data show that a tanker carrying nearly 2 million barrels will arrive in mid-April.

Given that the United States sails to China in the Gulf of Mexico for six to eight weeks, a significant increase in crude oil imports from the United States will occur as early as May or June.

LNG and coal trade have almost disappeared.

Liquefied natural gas (LNG) is a similar situation. According to Lufford data, only one shipment was unloaded in January and no scheduled arrivals were made in the coming months.

Seven shipments were unloaded in January 2018, and a total of 33 shipments of LNG with a total of 2.3 million tons were imported in the whole year of 2018.

Coal is another more successful American energy export product hit by the trade war. Refinitiv data show that no U.S. coal was unloaded in January.

Data show that there is only one unloading so far in February, and another is expected before the end of the month. There are two plans for March.

In 2018, China imported 3.6 million tons of U.S. coal, the largest in April, with seven batches of coal coming ashore.

If a proper agreement is reached between China and the United States, the momentum of a sharp decline in China’s energy imports from the United States may be reversed since the intensification of the trade dispute between China and the United States last year.

But considering that it takes time to re-establish trade relations, order and transport, it may actually take longer than Lamp thought it would be.

Given China’s apparent and growing demand for crude oil, liquefied natural gas and even coal, especially high-quality coking coal for steelmaking, energy procurement may be the best way for China to increase imports of American products.

But Beijing has shown that China can quickly and easily stop buying American energy products.

U.S. supply accounts for a small proportion of China’s total imports, and Beijing has no difficulty in procuring alternative goods.

The United States accounted for only 2.7% of China’s crude oil imports in 2018. LNG imports from the United States accounted for about 4.3% of the total and coal imports from the United States accounted for about 1.3%.

But as China is the world’s largest importer of crude oil and coal and the second largest importer of liquefied natural gas, a small increase in the share purchased from the United States will soon bring a large US dollar revenue to the United States.

Deloitte has released its 11th annual mining report Trend Tracking. The report reveals several major trends facing mining companies. As the industry enters a new stage of development, mining companies need to consider more and more issues in formulating corporate strategies, including stakeholder participation, talent, regional risks and shortage of imported commodities, the report said.

This year, key areas of mining concern include the use of analytical tools to control risks and optimize supply chains; in addition to meeting compliance requirements, it will also have a positive impact on industrial clusters and the whole society; change public perception of the mining industry, and attract and retain diversified labor force.

Phil Hopwood, Deloitte Global Partner in Mining and Metals, said: “The mining industry is expected to see the strongest growth in a decade, but the market environment today is completely different from what it used to be. Subversion and volatility have become the norm, and rapid changes have challenged the adaptability of the industry as a whole. In this new world order, if mining companies are only satisfied with the current value created for industrial clusters, they will not be able to obtain the support of talent, investment or industrial clusters. Mining companies need to take a further stand and develop differentiated business models to create long-term value.

Xu Bin, Deloitte China Mining Director Partner, stressed: “Digital supply network construction is just emerging in the mining industry. Mining enterprises are expected to achieve the interconnection of supply chains from mines to ports, break operational constraints, and fully understand the end-to-end situation of the supply chain, so as to improve asset utilization, operational efficiency and productivity, and ultimately achieve cost savings.

In the past, when mining companies formulated strategic plans, the guiding principle was usually to achieve the highest output at the lowest possible cost. In this way, in the expectation of rising commodity prices, mining companies will continue to expand the size of mines to achieve higher returns. Although the bubble has long been broken, many mineral company still need to work hard to solve the remaining problems caused by this strategy.

Hopwood believes that mining companies need to broaden their strategic horizons. Effective strategic planning should not only focus on reducing production costs, but also consider the role of individual assets in the investment portfolio, value creation path, risk and income balance, and how companies stand out in the eyes of stakeholders. These important choices will ultimately help mining companies formulate investment allocation strategies, establish partnerships, and identify capacity development goals.

Price Trend

According to the price monitoring of business associations, as of February 22, the average price of domestic methanol market was 2322 yuan/ton, and the domestic methanol market continued to rise.

II. Market Analysis

Products: Domestic methanol market continued the early part of the upward trend, the overall performance is good. Port spot traders rarely talk, forward paper sales are more active, intra-day futures shocks rise, driving the port to a small boost, but short-term high Treasury pressure still exists. In the Mainland market, the market climate is still acceptable, and some of them continue to rise. With the current partial production restriction and spring inspection boosting, the short-term market is expected to be affected by the supply side or strong performance; however, in the context of sustained tightening capacity, the prolonged export cycle of goods in the production area needs to be vigilant against local suppression; and close attention should be paid to recent equipment maintenance and inventory digestion in the port market.

Industry Chain: Formaldehyde: Linyi Formaldehyde Factory has returned to the market one after another, combined with the recent increase in raw material methanol finishing, to provide a certain cost support for the formaldehyde market. Zibo and its surrounding prices are around 1150-1200 yuan/ton; Linyi is around 1080-1110 yuan/ton. Acetic acid: The domestic glacial acetic acid market is stable and soft. North China is stable, and the stock pressure of enterprises is not high, so the offer is firm. Henan and East China have a positive intention to ship goods, but some of them have only slightly declined. The downstream demand is not good, the overall buying intention is weak and needs to be restored. In addition, the export negotiations are weak and the support for the domestic market is limited. Dimethyl ether: With the good support of downstream replenishment, the overall domestic dimethyl ether Market shipment situation has improved significantly in recent days and tentatively narrow upward, but in the short term, Xinxiangxin Lianheng increment and Yuhuang start construction expectations are expected to have little upward space.

3. Future Market Forecast

Business Cooperative Perspective: On the positive side, demand: At present, the new downstream replenishment support, the shopping atmosphere is still acceptable, the overall performance of the Mainland is good; Domestic devices: Mainland based on spring inspection and other factors, and the impact of environmental protection policies, maintenance enterprises continue to increase, late partial supply or contraction; Futures: futures market shocks, driving the spot market move. On the negative side, inventory: in the continuous replenishment of port imports, high inventory is difficult to digest in the short term, and the storage pressure is high; upstream: at present, some domestic gas projects are reworked and local supply is relatively abundant; international installations: Kaltim methanol plant in Indonesia, ZPC methanol plant in Iran and Malaysia are restarted and restored, so we need to pay more attention to the change of supply side. Methanol analysts at business associations predict that the short-term domestic methanol market will rise slightly.

China and Saudi Arabia (hereinafter referred to as Saudi Arabia) have made new breakthroughs in oil project cooperation.

On February 22, Saudi Crown Prince Mohammed bin Salman concluded his two-day visit to China. During their visit to China, China and Saudi Arabia signed two rounds of memorandums of understanding on key projects of capacity and investment cooperation. Among them, the largest amount of project contracted by the two sides “Flowers” falls in Liaoning Province in Northeast China.

The project was signed by Saudi Arabian Oil Company (hereinafter referred to as Saudi Arabian Oil Company), China Weapons Industry Group Limited (hereinafter referred to as Chinese Weapons) and Panjin Xin Honest Industry Group (hereinafter referred to as Panjin Industry). The three parties intend to invest more than 69.5 billion yuan (about $10.9 billion) to establish Huajin Ami Petrochemical Co., Ltd. (hereinafter referred to as Huajin Ami) in Panjin City, Liaoning Province. 。

According to the official website of Saudi Arabia and the United States, Huajin and Ami will become the largest Sino-Saudi joint venture in history, with commercial operation expected in 2024.

After the completion of the project, Chinese weapons will hold 36% of Huajin Amy, 35% of Saudi Amy and 29% of Panjin Industries.

Huajin Ami project covers an area of 598 hectares. It plans to build an annual refining capacity of 15 million tons (300,000 barrels per day), ethylene production capacity of 1.5 million tons, and PX production capacity of 1.3 million tons, with the goal of becoming a world-class integrated refining and chemical base.

Amy Nasser, Saudi Arabia’s CEO, said the project clearly illustrated the company’s strategy: China and Saudi Arabia can make significant investments in China in order to promote China’s economic growth and development from the previous relationship between buyers and sellers in the petrochemical field.

Seventy percent of the crude oil will come from Saudi Arabia and the United States in the Huajin A-U.S. joint venture project.

According to Liaoning Daily, the Sino-Saudi joint refining project was approved by the Liaoning Provincial Government in July 2015 and is expected to add 100 billion yuan of sales revenue, 11 billion yuan of profits and 20 billion yuan of tax revenue to the northeast region every year.

Saudi Arabia and the United States cooperate with Liaoning Province in more than refining projects. Nasser said that by the end of 2019, Saudi Arabia Amy, Northern Huajin Chemical Industry Group Co., Ltd. and Liaoning Communications Construction Investment Group will form a tripartite marketing joint venture to jointly develop retail gas station projects in China.

The Huajin Ami project will also greatly enhance the refining and petrochemical production capacity of Chinese weapons.

China Weapons was founded on July 1, 1999, and was reorganized on the basis of the former China Weapons Industry Corporation. In 2018, China’s main revenue in military industry and other fields reached 450 billion yuan, ranking 140th among Fortune magazine’s top 500 enterprises in the world.

At the beginning of 2000, Chinese weapons began to enter the petroleum industry. At present, petroleum business has covered oil and gas exploration and development, crude oil and product oil trade, oil and gas storage and transportation, petroleum refining and liquefied natural gas (LNG), forming a relatively complete industrial chain.

By the end of 2017, China’s weapons had oil and gas exploration blocks in six countries, with geological reserves exceeding 1 billion tons, of which the annual trade volume of crude oil and refined oil reached tens of millions tons. At present, the annual refining capacity of Chinese weapons in Liaoning Province has reached 8 million tons.

In May 2017, China’s weapons signed the Joint Development Agreement with Saudi Arabia, Amy and Panjin Industries to jointly develop the “Fine Chemical and Raw Materials Engineering of Chinese Weapons” project and held a foundation-laying ceremony.

Panjin Industry is a wholly state-owned company funded by the State-owned Asset Management Office of Panjin Liaobin Coastal Economic Zone. It was founded on November 1, 2010 with a registered capital of about 940 million yuan.

China-Saudi Arabia Investment Cooperation Forum was held in Beijing on the day of the signing of the Huajin Ami Project. At the forum, China and Saudi Arabia also signed 35 agreements and memorandums of understanding. According to the rough statistics of interface news, the total amount of the contract is more than $28 billion, involving petrochemical, manufacturing, new energy, communications and other industries. Among them, the investment amount of petrochemical industry is over 17 billion US dollars, accounting for about 60% of the total amount.

Saudi Arabia cut its crude oil exports in December under the OPEC agreement, falling from a two-year high in the previous month, according to Prussian Energy Information.

As the world’s largest exporter of crude oil, Saudi Arabia’s crude oil exports in December were 76.87 million barrels per day, down 548,000 barrels per day from November, when shipments reached their highest level since November 2016, just before the Organization of Petroleum Exporting Countries (OPEC) began implementing the production reduction agreement in January 2017.

JODI data show that refinery output fell to 2.684 million barrels per day in December, a decrease of 152,000 barrels per day compared with November, while direct combustion of electricity-generating crude oil increased to 364,000 barrels per day, an increase of 36,000 barrels per day.

According to JODI data, crude oil inventories fell to 205.376 million barrels, down 16% year-on-year.

Saudi Arabia reported to OPEC earlier this month that its crude oil production fell to 10.243 million barrels a day in January as a result of a sharp reduction in production before the new reduction agreement came into force on January 1.

Saudi energy minister Khalid Fallich told the Financial Times last week that production in March would fall to 9.8 million barrels a day, below the 10.311 million barrels a day quota set in its latest agreement. He added that exports would fall to about 6.9 million barrels a day.

Reporters recently learned from the Shanxi Provincial Department of Natural Resources that the province has vigorously implemented geological prospecting operations in recent years. Last year, 2.437 billion tons of coal resources were newly discovered, far exceeding the same period of coal production.

Shanxi is known as “Coal Sea”. According to estimates, the coal-bearing area of Shanxi Province is 57,000 square kilometers, accounting for 36.3% of its territorial area. By the end of 2014, Shanxi has accumulated 29.43 billion tons of proven coal reserves and 268.967 billion tons of retained resources, accounting for 17.56% of the country’s total reserves, ranking third in the country.

Shanxi Province has vigorously implemented geological prospecting operations in recent years. Last year, provincial finance invested 357 million yuan, arranged 83 geological prospecting projects, checked and accepted 60 previous projects, and added a number of important mineral resources reserves, including 2.437 billion tons of coal resources and 82 million tons of bauxite.

With the increasing reserves of coal resources, Shanxi’s annual coal output has stabilized in recent years: in 2016, Shanxi’s coal output was about 832 million tons; in 2017, Shanxi’s coal output was about 875 million tons; according to the latest data released by Shanxi Statistical Bureau, Shanxi’s coal output was about 893 million tons in 2018.

It is reported that Shanxi has been deepening the structural reform of coal supply side in recent years. Over the past three years, it has withdrawn 88.41 million tons of excess capacity of coal. It is expected that Shanxi will withdraw more than 100 million tons of excess capacity of coal in an orderly manner by 2020, and the output of raw coal in the whole province will stabilize at about 1 billion tons.

According to the Organization of Petroleum Exporting Countries (OPEC), Angola’s oil production in January 2019 was 1416,000 barrels a day, a decrease of 75,000 barrels annually.

In an interview with reporters, Saudi Minister of Energy, Industry and Mines Falkh said that Saudi Arabia intends to further reduce production in March in order to balance the global oil supply and demand relationship. Fallich said Saudi oil production in March was 9.8 million barrels per day, more than 500,000 barrels lower than the promised output reduction agreement of OPEC. Saudi oil exports in March are expected to be 6.9 million barrels a day. Brent crude oil rose 2% to nearly $63 that day. Fallich also said that if the United States introduced anti-monopoly legislation against OPEC, it would damage the global economy.

According to customs statistics, in January this year, China’s total value of import and export of goods trade was 2.73 trillion yuan, an increase of 8.7% over the same period last year (the same below). Among them, exports increased by 13.9% to 1.5 trillion yuan, imports by 1.23 trillion yuan, an increase of 2.9%, and trade surplus by 27.116 billion yuan, an increase of 1.2 times.

Priced in US dollars, China’s total import and export value in January was US$395.98 billion, an increase of 4%. Among them, $217.57 billion in exports, an increase of 9.1%, $178.41 billion in imports, a decrease of 1.5%, and $39.16 billion in trade surplus, an increase of 1.1 times.

General trade has grown rapidly and its share has increased. In January, China’s general trade imports and exports reached 1.66 trillion yuan, an increase of 13%, accounting for 60.9% of the total value of our foreign trade, an increase of 2.3 percentage points over the same period last year. Among them, exports amounted to 896.3 billion yuan, an increase of 20.9%; imports amounted to 766 billion yuan, an increase of 5%; and trade surplus amounted to 130.3 billion yuan, an increase of 10 times. In the same period, the import and export of processing trade dropped by 0.9% to 680.7 billion yuan, accounting for 24.9% and by 2.4 percentage points. Among them, exports amounted to 435.86 billion yuan, an increase of 3%; imports amounted to 244.84 billion yuan, a decrease of 7%; and trade surplus amounted to 191.02 billion yuan, an increase of 19.5%. In addition, China imports and exports 279.73 billion yuan by means of bonded logistics, an increase of 9.3%, accounting for 10.2% of the total value of our foreign trade. Among them, exports amounted to 90.69 billion yuan, an increase of 13.9%, while imports amounted to 189.04 billion yuan, an increase of 7.2%.

Among them, crude oil, natural gas and other commodities imports increased, iron ore and soybean imports decreased, and the average price of commodity imports rose and fell. In January, China imported 91.26 million tons of iron ore, a decrease of 9.1%, the average import price was 511.3 yuan per ton, an increase of 7.4%; crude oil 42.6 million tons, an increase of 5.1%, the average import price was 3021.1 yuan per ton, a decrease of 3.1%; coal 33.5 million tons, an increase of 19.5%, the average import price was 576.4 yuan per ton, an increase of 3.68 million tons; soybean 7.38 million tons, a decrease of 13%, the average import price was 3101.5 yuan per ton, an increase of 12.1%; natural gas 9.1 million tons. The average import price increased by 26.8% to 3416.2 yuan per ton, up by 30.8%; the average import price of refined oil increased by 17.5%, and the average import price was 3681.7 yuan per ton, up by 4.1%; the average import price of plastics in primary shape increased by 7.4%, and the average import price was 104,000 yuan per ton, down by 7.3%; the average import price of steel was 118,000 tons, down by 1%, and the average import price was 8178.3 yuan per ton, down by 0.6%; the average import of unwroughed copper and copper was 480,000 tons, up by 0,000 tons. The average import price was 44.9 million yuan per ton, down 8.5%. In addition, the import of mechanical and electrical products was 519.63 billion yuan, down by 1.6%; of which 32.42 billion integrated circuits, down by 9.7%, value of 16.02 billion yuan, down by 35%; 80,000 cars, down by 12.3%, value of 27.82 billion yuan, down by 1%.

The International Energy Agency (IEA) said in a report Wednesday that even if OPEC cuts production and the United States imposes sanctions on Venezuela and Iran, it will be difficult for the global oil market to absorb the fast-growing crude oil supply outside OPEC this year, Reuters reported in London.

The IEA maintained its demand growth forecast for 2019, unchanged from the previous report (released in January), which still stands at 1.4 million barrels a day.

“The drop in oil prices and the start-up of Sinopec and American Petrochemical projects are supporting this trend, but the slowdown in global economic growth will limit any upside space,” the IEA said.

The IEA raised its estimate of growth in crude oil supply outside OPEC from 1.6 million barrels a day to 1.8 million barrels a day in 2019.

The agency also downgraded its forecast for OPEC’s crude oil demand. OPEC has pledged to reduce OPEC’s crude oil production by 800,000 barrels a day this year as part of an agreement with other non-OPEC producers such as Russia, Oman and Kazakhstan.

According to current forecasts, OPEC crude oil production in 2019 is 30.7 million barrels per day, lower than the last estimate of 31.6 million barrels per day by the International Energy Agency in January.