In April, China's monthly imports from Russia hit a record high of US$8.9 billion. This was an increase of 57% from the year before and 13% higher than March.
At face value, it may appear that China is importing more from Russia, but soaring commodity prices provide another view. Currently, 80% of Chinese imports of Russian products are minerals, with crude oil making up most of that.
The average import price of crude oil in April was 70% higher than this time last year. The net effect is that there was only a 2.6% increase of crude oil arriving from Russia month-on-month. Before the war began, China had been stepping up crude purchases from Russia. However, this buying surge has coincided with strict Coronavirus lockdowns hitting the wealthiest parts of China in the past two months, choking the economy and reducing demand.
What does this mean for me?
China simply no longer needs as much crude oil from Russia. As a diversified investor, you will know that the global economy is in a constant state of change. Opportunities present themselves and disappear as countries try to chase their own agendas.
Be on the lookout for how China comes out of its self-imposed lockdowns, as this is bound to unblock parts of the global supply chain and increase demand of key commodities, like crude oil.