The world’s top metals consumer, China, is considering opening up its commodities markets, as the government wants increased pricing power in the markets it dominates. Copper is the major target of the country’s ambitions.

From Thursday, overseas investors will be able to trade copper futures on the Shanghai International Energy Exchange. The contract size will be the same as that intended for local traders, but will exclude tax and customs duty, and will be delivered into bonded warehouses, helping it compete actively with the London Metal Exchange.

According to BMO Capital Markets, China now accounts for more than half the world’s copper consumption, up from 39 percent in 2010 and 12 percent in 2000.

The country’s recovery from the coronavirus crisis saw copper imports top two million tons in the third quarter.

Official data showed that imports of copper by China in the first nine months of 2020 were up 41 percent from a year earlier, at 4.99 million tons. According to the General Administration of Customs, that is already more than the 4.98 million tons China imported in the whole of 2019.

Global copper prices have reached a two-year record high thanks in part to the speedy recovery of China’s economy in the post pandemic era. Industry experts suggest that China’s expanding power and construction sectors will continue to support copper demand and become the major driver of global copper consumption growth.

“This is thanks to healthy consumption in China due to an economic stimulus package and demand from the construction industry, as well as improving market sentiment,” international credit-rating agency Fitch Ratings said in a recent statement.

China has already allowed foreigners to trade oil and iron ore on its commodities market. In March 2018, it successfully launched a yuan-denominated crude-oil contract. A subsequent push to let foreigners trade iron ore in Dalian established a global benchmark. Analysts say copper could be an even bigger success.

On November 12, the Mongolian State Emergency Committee announced a full curfew for five days in Ulaanbaatar, the capital of Mongolia. All citizens have been asked to stay home and leave only to buy food and essentials. All businesses have been closed except news media, utilities and essential city services, gas stations, supermarkets, companies engaged in food production, banks, and others. Citizens have been urged to wear masks and gloves when outside.

The measures came after a truck drive tested positive for COVID-19 after 21 days of quarantine. Every truck driver has to undergo quarantine after hauling cargo from Russia or China, Mongolia’s two neighbors. During the quarantine, according to health officials, the truck driver was tested three times for COVID-19. All three tests came back negative. Health officials have since acknowledged a breach of protocol in the quarantine measures during his stay in the hotel.

After quarantine, the driver watched a concert and visited various stores. Government officials are now working day and night to trace all the people who have been in contact with the individual. So far more than 3,000 people have been asked to self-isolate and get tested for COVID-19. So far four family members of the original case, and two friends of a family member, have tested positive.

At the same time a 74-year-old woman, along with her daughter-in-law and granddaughter, in Selenge province, neighboring Russia, has also tested positive. Just before being diagnosed with COVID-19, the daughter-in-law visited Darkhan city, Mongolia’s second largest city, where she visited a shopping mall and playground. It is not clear how the family got infected. It appears this case is not related to the truck driver in Ulaanbaatar. After those cases were reported, more than one hundred children were tested for COVID-19; all the tests came back negative. The authorities are working franticly to trace all the contacts. Darkhan city has been put under a curfew as well.

Mongolia as of November 16 had reported 431 cases of COVID-19, of which 328 people have recovered. The country has not seen any fatalities linked with the pandemic. Before November 12, all of Mongolia’s cases were imported from abroad via repatriated citizens.

Mongolia instituted early measures in combatting COVID-19. From February 12, the government closed all schools and mandated that all citizens wear masks. The government even suspended celebrations of Tsagaan Sar, Mongolia’s Lunar New Year as a precaution. The early measures have paid off with a low case count and zero COVID-19 deaths. Now, with the first cases of local transmission, Mongolia’s government is moving decisively to respond.

Anandsaikhan Nyamdavaa is an independent consultant based in Ulaanbaatar, Mongolia.

Mongolia has lost its status as a country free of community transmissions of coronavirus (COVID-19) and on November 13 entered a five-day lockdown, extended on November 16 until December 1.

A truck driver back from Russia, who underwent a 21-day mandatory isolation, nevertheless appears to have infected his wife in Ulaanbaatar. The State Emergency Commission is facing questions as to why his infection, discovered on November 9, was not detected during the quarantine period that ended on November 6.

A second community transmission involves a 74-year-old woman, along with her daughter-in-law and granddaughter in the northern part of Mongolia, in Selenge province. Health Minister Togtmol Munkhsaikhan said there was no known connection with the truck driver or his wife.

As of November 15, nine people in Mongolia were recorded as infected following contact with the driver.

A whistleblower, who was quarantined in the same quarantine facility, Enkhsaran, as the truck driver claimed to local press that there was a cluster of infections in the quarantine facility and that he caught the virus almost on the last day of his 21 days of quarantine. Munkhbat and many others see the situation as down to government negligence and say officials have not been entirely straight with people on the pattern of the virus spread.

On November 15, the health minister stated that there have been 40 cases connected to the set quarantine facility, stating there were three clusters of COVID in Mongolia—linked to the truck driver, the Selenge province woman and the quarantine facility.

Since April, citizens who have been repatriated have criticized the quarantine facilities as lacking any form of proper cleanliness and as not being accommodating. People who were quarantined demanded that the quarantine period be reduced to 14 days from 21 days and that the 14-day home isolation be scrapped. The government subsequently abolished the 14-day home quarantine.

Tedros Adhanom Ghebreyesus, director-general of the World Health Organisation, praised Mongolia on Twitter last week for “showing us that by following proven public health advice we can stop this virus from spreading.”

The country has not recorded a single coronavirus death.

In their scramble to contain the virus after the first local transmissions were confirmed, authorities sent out jumbled orders, such as on what transport means to use, but were forced to retreat on some instructions after a public outcry grew intense. People complained for instance that there was no communication of who should take care of the children of essential workers. They said it was as if the government had no contingency plan for a virus outbreak.

Trade vulnerabilities

Under the lockdown, border points dealing with trade with Russia will provide limited access or will be shut down entirely from November 16 to January 18, while oil imports will only enter Mongolia once every two days from Russia. In terms of China, Mongolia will keep its trade routes open. An insider from China's coal trade expressed worries that Mongolia will close its borders soon.

Local mining companies are worried that if Mongolia isn’t successful in containing the virus, China might close its borders or limit trade. This would undo the success it had in terms of exporting coal to China since August, helped by China’s squeezing of coal imports from Australia, with which it is involved in diplomatic spats. In September, Mongolia overtook Australia as the number country exporting coal to China.

If China closes its borders with Mongolia it will heavily impact the state budget. Mongolia’s parliament scrambled to ratify the 2021 state budget on November 13.

One out of three mining operations might be in jeopardy if the virus situation worsens. Most of the coal mines that export to China are located in southern Mongolia. The Rio Tinto-financed Oyu Tolgoi copper and gold mine and other gold and precious metal exploration mining sites are also located to the south; however, the Erdenet Mining corporation, which produces 22.23mn tonnes of ore per year, 126,700 tonnes of copper and 1954 tonnes of molybdenum, could face closures as it is located next to the province where the second virus cluster was recorded.

In 2019, trade with China accounted for 90% of Mongolia’s export revenue, but Russia accounted for just 0.9%. Mongolia had a trade surplus of $3bn in 2019, but a trade balance deficit of $915.5mn with Russia as part of that, according to Mongolia’s national statistics office.

So, the border closure with Russia might not mean much in terms of Mongolia’s bottom line, but a border closure with China would greatly impact Mongolia’s economy.

by Anand Tumurtogoo

Ulaanbaatar/MONTSAME/. Deputy Prime Minister Ya. Sodbaatar introduced the decision of the irregular Cabinet meeting held today.

He said, “The Cabinet has just held its irregular meeting and resolved some issues.

First, bonus payments for doctors, health workers, emergency personnel, and police officers, who are working in risky conditions to combat the COVID-19, have been resolved. In the first turn, 14809 people will receive the bonus, which will be disbursed by the government’s reserve fund.

Second, the Cabinet has made two decisions related to the food supply. First, a Bill on exempting certain types of goods from VAT will be submitted to the Parliament for consideration. Second, a Bill to amend the Customs Tax Law will be submitted to the Parliament for urgent consideration.

Third, the Cabinet has decided to allocate specific funds for the purchase of wheat from abroad with a purpose to create food security reserves."

In addition, today, corresponding ministers got acquainted with situations of livelihoods of vulnerable groups, dormitories, and energy and water supply, and ensured required preparations.

China’s unofficial ban on coal imports from Australia is starting to take its toll on volumes, with departing cargoes down sharply so far in November. But something odd is happening with prices.

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China imports two main types of coal from Australia, coking coal used to make steel and thermal coal, used predominantly to generate power, but which can also be used in industrial processes such as cement and ceramics.

As you may expect, the lower Chinese demand for coking coal has hit prices, with Singapore Exchange futures SCAFc1, which mirror free-on-board Australian prices, dropping to a four-year low of $104.86 a tonne on Friday.

This is down 25.1% from the recent peak of $140 a tonne on Oct. 5, hit just before reports started emerging of Chinese officials giving unofficial verbal instructions to traders and steel mills to halt purchases of Australian coal.

While Beijing has made no official comment on banning Australian coal imports, along with commodities such as copper ores, lobsters and barley, China has made clear its anger over Canberra’s call for an international probe of the origins and early response to the coronavirus pandemic.

Unlike coking coal, however, the price of benchmark Australian thermal coal at the main port of Newcastle has been moving in the opposite direction.

Newcastle coal futures traded on the ICE Exchange NCFMc1 closed at $63.25 a tonne on Friday, down slightly from the prior day’s close of $62.30, which was the highest in seven months.

The contract has gained 30.4% since this year’s low of $48.50 on Sept. 7, and has also rallied about 7% since the start of November.

The Newcastle weekly index ARGMCCINDX=ARG, as assessed by commodity price reporting agency Argus, ended last week at $58.30 a tonne, also the highest since mid-April and about 26% above this year’s low of $46.37 from the first week in September.

The question is why the price of Australian thermal coal should be rising amid an effective ban by China, especially since volumes appear to be plummeting.

Australia’s exports of both coking and thermal coal to China were 3.35 million tonnes in October, up slightly from September’s 3.31 million, but dramatically down from 12.33 million in June, the strongest month so far this year, according to vessel-tracking data compiled by Refinitiv.

The sharp drop in recent months appears likely to get worse in the current month, with just four vessels having loaded coal until now with China as a destination.

While the data only reflects the first half of November, it is worth noting that October saw 33 ships depart Australia for China, and the peak month of June saw 124 departures.

Australia surviving without China?

However, the shipping data also shows that Australia’s total exports have not been too badly affected, with October departures of 29.34 million tonnes only slightly below September’s 29.86 million and the 32.7 million from the peak month this year of June.

This suggests that Australia has managed to find other customers for the coal that China is not taking, and indeed exports to India in the three months to October were the highest since April, with September’s figure of 5.97 million tonnes the highest in Refinitiv data going back to the start of 2015.

However, India’s coal imports from Australia are overwhelmingly coking coal and therefore should have little impact on the price of thermal coal.

Outside China, Australia’s major thermal coal customers are Japan and South Korea, which present a more positive picture for Australian coal miners.

Australia’s exports to Japan have picked up slightly in recent months, with October’s 8.3 million tonnes and September’s 8.45 million being the best since March.

Shipments to South Korea were 4.95 million tonnes in October, up from 4.24 million in September and the strongest since December last year.

Another factor is that China is having to scramble to source alternative supplies of thermal coal, and there are few countries that can easily step up and deliver coal of the same quality as Australia.

One of those is South Africa, where the price of thermal coal at the main export port of Richards Bay API4INDEX=ARG, has been rallying, ending at $67.09 a tonne for the week to Friday, up 17.5% from a recent low in mid-October.

The rising price of alternatives to Australia’s Newcastle has the effect of dragging up the price there as well, notwithstanding Chinese buyers’ withdrawal from the Australian market.

It is also likely that some global trading players have taken bullish positions in anticipation of Chinese traders trying to find alternatives to Australian cargoes.

Overall, what appears to be happening is that the thermal coal market is adjusting to the increased likelihood that China will buy less from Australia, and more from elsewhere, even if it ends up in higher prices for a period.

(Editing by Clarence Fernandez)

Lodging website Airbnb has filed papers in the US to become a publicly listed company in what is one of the most-anticipated launches of the year.

Since its founding as home-sharing site in 2008, the San Francisco tech firm has grown into a global juggernaut.

Its rise has challenged traditional hotel rivals and cities coping with an influx of tourists to new areas.

And while the pandemic hurt the firm's already loss-making business, Airbnb said its model remains resilient.

The company reportedly hopes to raise about $3bn (£2.27bn) by selling shares in the listing, which could value the firm at more than $30bn.

IPO listing

"We believe that the lines between travel and living are blurring, and the global pandemic has accelerated the ability to live anywhere," the company said in its Securities and Exchange Commission filing for its initial public offering (IPO). "Our platform has proven adaptable to serve these new ways of traveling."

More than 4 million hosts list properties on the platform, 86% of which are located outside of the US. Last year, roughly 54 million people reserved stays through the company, which takes a cut of each booking.

But travel was hit hard by the pandemic, prompting the company to slash staff numbers by 25% and raise $2bn in emergency loans from investors to make it through the crisis.

The firm said bookings have since recovered somewhat, as people looked to escape locked down cities with long-term rentals. But they remain down about 20% in recent months compared to last year.

In 2019, the firm booked losses of more than $674m - a figure it has already surpassed in the first nine months of this year.

The firm, which brought in revenue of $4.8bn last year, also warned potential investors that revenue growth had slowed, a trend likely to continue.

Between 2018 and 2019, the firm's revenue grew more than 30%. But it fell more than 30% year-on-year in the first nine months of 2020, to $2.5bn from $3.7bn a year earlier.

Separately, shares of electric car maker Tesla jumped 9% in extended trade on Monday after S&P Dow Jones Indices said that the company would join the S&P 500 index. It will join on 21 December.

Ulaanbaatar /MONTSAME/ At its extended meeting on November 15, the Cabinet backed the State Emergency Commission’s proposal to extend the heightened state of readiness for disaster protection or strict-lockdown by 14 days until 6 AM of December 1, approving a resolution. After the meeting, Prime Minister U.Khurelsukh gave the following orders to Cabinet members, state administrative officials, and aimag and capital city governors.

To speed up the detection of suspected cases, promptly control and stop the infection spread, and enhance public health protection and risk reduction,

To decontaminate infected public spaces, buildings, and surfaces with promptitude and supervise the decontamination efforts,

To prevent food supply disruptions, increase food and medication supply for vulnerable communities and dorm students, prevent domestic violence, and improve child protection,

To prevent interruption in supply of fuel, power, heat, and water, and oil transport.

While giving orders, the Prime Minister said the government must curb the infection spread within the period of heightened state of readiness and instructed citizens to stay at home, wash their hands, and wear masks and keep social distance when outside for essential activities.

Experts from the US-based Institute for Energy Economics and Financial Analysis published a commentary stating that Peabody Energy (NYSE: BTU), —the world’s largest private coal miner— seems to be flirting with bankruptcy just three-and-a-half years after emerging from its previous default.

According to Clark Williams-Derry, energy finance analyst at the IEEFA, and energy data analyst Seth Feaster, Peabody painted a bleak picture of the global coal market for its investors. The company said that demand for metallurgical coal used in steelmaking has yet to recover from the global impacts of the coronavirus, and the company expects only modest growth over the next several years.

However, Williams-Derry and Feaster point out that even though the covid-19 pandemic has deepened Peabody’s woes, as lower industrial electricity demand and low gas prices pushed coal to a record-low power market share of 15% in April, the company had already been posting losses for five consecutive quarters, revealing financial strains that long predated the current global economic slowdown.

When Q3-2020 ended, Peabody said that it expected to violate key terms of its credit agreement by December 31. The IEEFA says that this may lead to the miner to default on its debt, forcing a financial restructuring and potential wipeout for shareholders.

“Peabody held out hopes that rising demand from Asia could spur future growth, even though many Asian countries have cancelled or postponed new coal plant projects as they increasingly pivot to renewable generation,” the commentary reads.

“In recent months, governments have announced major national electricity policy shifts in Bangladesh, Vietnam, the Philippines, and Thailand. There have also been highly successful solar tenders from Malaysia and Myanmar that will further limit coal’s upside in Asia. Last month, Japan and South Korea announced ambitious net-zero emissions policy commitments, following China’s plans to become carbon neutral by 2060.”

In the view of Williams-Derry and Feaster, even though Peabody once seemed relatively immune to the changes sweeping through the sector, some of its biggest rivals — like Arch Resources — both in the U.S. and internationally have now outperformed it by shifting away from thermal coal in favour of higher-value metallurgical coal used in steelmaking.

“But Peabody, with its massive suite of thermal coal mines, has been either unable or unwilling to pivot to a more profitable or financially sustainable business model. As a result, the company’s revenues have fallen dramatically since 2018. As recently as mid-2018, Peabody’s share price stood at $45. Now, it is below $1 per share—a critical threshold that could force the New York Stock Exchange to remove Peabody from its listings.”

For the IEEFA analysts, the plunge in its share price hints at a growing financial market consensus that thermal coal is now on a long-term decline that is likely terminal.

“Once again, investors, creditors, workers, and the communities with company mines should brace themselves as Peabody struggles to survive amid rapidly changing markets and a deteriorating outlook for the highly polluting, carbon emissions-intensive, technologically challenged industry,” the article states.

Mongolia has imposed strict actions in order to take control over the recent local transmissions of coronavirus; banning residents leaving from leaving their homes. Subsequently, the Mongolian parliament is also closed and its sessions are taking place online. Today (13 November) law makers attended a parliament session online from home and discussed the 2021 State Budget.

According to the law, the Mongolian parliament must approve the 2021 State Budget before 15 November.

Fifteen countries have formed the world's largest trading bloc, covering nearly a third of the global economy.

The Regional Comprehensive Economic Partnership (RCEP) is made up of 10 Southeast Asian countries, as well as South Korea, China, Japan, Australia and New Zealand.

The pact is seen as an extension of China's influence in the region.

The deal excludes the US, which withdrew from a rival Asia-Pacific trade pact in 2017.

President Donald Trump pulled his country out of the Trans-Pacific Partnership (TPP) shortly after taking office. The deal was to involve 12 countries and was supported by Mr Trump's predecessor Barack Obama as a way to counter China's surging power in the region.

Negotiations over the RCEP began in 2012. The deal was signed on Sunday on the sidelines of a meeting of the Association of Southeast Asian Nations (Asean), hosted by Vietnam.

"I am delighted to say that after eight years of hard work, as of today, we have officially brought RCEP negotiations to a conclusion for signing," said Vietnam's Prime Minister Nguyen Xuan Phuc.

Officials took turns signing copies of the agreement and showing them off on camera at the virtual summit.

Leaders hope that the deal will help to spur recovery from the coronavirus pandemic.

"Under the current global circumstances, the fact the RCEP has been signed after eight years of negotiations brings a ray of light and hope amid the clouds," said Chinese Premier Li Keqiang.

Mr Li described the agreement as "a victory of multilateralism and free trade".

India was also part of the negotiations, but it pulled out last year over concerns that lower tariffs could hurt local producers.

Signatories of the deal said the door remained open for India to join in the future.

Members of the RCEP make up nearly a third of the world's population and account for 29% of global gross domestic product.

The new free trade bloc will be bigger than both the US-Mexico-Canada Agreement and the European Union.

The RCEP is expected to eliminate a range of tariffs on imports within 20 years.

It also includes provisions on intellectual property, telecommunications, financial services, e-commerce and professional services.

But it's possible the new "rules of origin" - which officially define where a product comes from - will have the biggest impact.

Already many member states have free trade agreements (FTA) with each other, but there are limitations.

"The existing FTAs can be very complicated to use compared to RCEP," said Deborah Elms from the Asian Trade Centre.

Businesses with global supply chains might face tariffs even within an FTA because their products contain components that are made elsewhere.

A product made in Indonesia that contains Australian parts, for example, might face tariffs elsewhere in the Asean free trade zone.

Under RCEP, parts from any member nation would be treated equally, which might give companies in RCEP countries an incentive to look within the trade region for suppliers.