• China could introduce more steps towards exit from Covid-Zero austerity tomorrow: Reuters
  • Exit from Covid restrictions would be a tailwind for iron ore, copper and oil
  • Coal miners rise despite domestic price cap chatter


Covid’s remaining bubble boy, China, is inching closer to an exit from its austere policy, with State Media increasingly reporting on measures to unwind its harsh lockdowns and set of public restrictions.

Rumours of more policy changes were reported by Reuters, which said 10 new measures to unwind its restrictions could come as soon as tomorrow.

It comes as State-linked rag China Daily reported this morning on shifts in Beijing, where PCR tests will no longer be required to enter supermarkets, shopping malls and office buildings.

It is a far cry from the statements and opinion pieces coming out of CCP-linked Chinese news sources in October ahead of China’s National Congress, which hinted at a long haul for Xi Jinping’s Covid-Zero strategy, something which began to unravel with major public protests last month.

Even pessimistic observers now think China’s reopening timeline has come forward.

Capital Economics, which previously thought China would not rejoin the global economy in ‘living with Covid’ until 2024 on account of its poor elderly vaccination coverage, now thinks mid-2023 is likely.

“Although officials aren’t yet ready to abandon the zero-COVID policy, they are getting more serious about preparing for an eventual exit,” CapEc’s senior China economist Julian Evans-Pritchard said in a recent note.

“The National Health Commission (NHC) has launched a new vaccination drive and local authorities have reportedly been given targets to hit by end-January.

“This is probably just a starting point. We think officials will want at least 90% (if not 95%) of the elderly to have received three jabs before allowing the virus to spread widely.

“That will take a further four months from end-January at least, despite the NHC shortening the gap between doses.

“The upshot is that officials appear to be laying the groundwork for an exit from zero-COVID around the middle of next year. It’s uncertain at this stage whether the vaccination rollout will proceed as quickly as planned, however, given that remaining vaccine holdouts are likely to be hesitant to get jabbed.

Evans-Pritchard says China still seems reluctant to introduce Australian-style vaccine mandates.

“But numeric targets will certainly help to concentrate minds among local officials, who may now go to greater lengths to encourage uptake.”

An end to China’s Covid austerity would be viewed as a positive for commodities, especially iron ore and copper, but also oil, where a stunning rise in prices prompted by supply concerns after Russia’s invasion of Ukraine has been kept in check by weak Chinese demand.


Coal miners lead the market

A return to prices for Newcastle thermal coal above the US$400/t mark was enough to send producers of the fossil fuel back into go mode.

Yancoal (ASX:YAL) lifted 5.14% to $5.625, with Whitehaven Coal (ASX:WHC) up nearly 3% at 3.30pm AEDT.

Coronado (ASX:CRN), New Hope (ASX:NHC) and Stanmore (ASX:SMR) were all in the green as investors eyed higher prices.

It comes despite growing chatter about plans from the Albanese Government to place a cap on domestic coal prices, which are facing push back from coal rich states in New South Wales and Queensland.


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