Good morning,
Welcome to the subjective list of top 10 News from Russia.
And in today's ranking: Moscow attack drones, Dima gives another atomic warning, China recovers central asias and exports more and more to Russia. I will besides talk about oil and inflation, which does not let go.
Place 10 – Drones attack Moscow.
On the night of July 30, Ukrainian drones attacked Moscow, informed the city authorities and the Ministry of Defence. According to the authorities, 2 drones damaged 2 buildings – the tower of the IQ territory where respective national ministries are located, and the Oko-2. According to authoritative records, no 1 was injured and there were no casualties. However, the origin of the TASS said that a bodyguard was injured, and the photos do not confirm the authoritative version that drones were knocked down by OPL and anti-drone systems. Unless we presume the Russians are dropping it on their own ministries.
This is another partially successful attack on ministerial facilities in Moscow.
The situation is akin in Crimea, where 25 drones were utilized at night. The Russians say they shot down 15, and 9 disabled. However, witnesses have heard at least 2 large explosions.
It is worth noting that Ukrainians usage drones of the kind more and more frequently. And the attacks are getting more regular and the number of drones is increasing.
Place 9 – Dima scares the nuns again
Medvedev warned against the threat of atomic weapons being utilized in the event of the success of the Armed Forces of Ukraine.
If the offensive of Ukrainian troops succeeds and they will be able to occupy, although any of the territories that entered Russia, Moscow will gotta usage atomic weapons, warned Vice-President of the safety Council Dmitri Medvedev. In this way, the Russian military, while resisting the offensive, "prevents the planet conflict," states.
Medvedev said that the offensive is carried out with the direct support of NATO, and its goal is to “reject part of our land”. "We would gotta usage atomic weapons under the provisions of the Russian President's decree of 02.06.2020 in the event of a successful offensive by the Armed Forces of Ukraine. There's just no another way. That's why our enemies and Nato must pray for our soldiers. Let us not let the global atomic fire to erupt," he wrote on his Telegram channel. Russian sources don't say if he was sober.
Place 8 – Further nipponese sanctions
The nipponese government banned supplies to Russia of cars with a capacity of more than 1, 9 liters and hybrid engines, as well as tyres for trucks. The fresh restrictions were announced by the head of the Ministry of Economy Yasutoshi Nishimura. 170 products have been found in the latest package of sanctions.
"Limitations will enter into force on 9 August".
According to the customs service of Vladivostok, in the first half of 2023 The Russians doubled imports of nipponese cars, compared to last year, to 130 1000 units.
Place 7 – The government banned rice exports from Russia by the end of the year.
The government banned exports of rice and rice flakes from Russia until 31 December. The applicable decree was signed by Prime Minister Mikhail Miszustin, reports the press service of the Cabinet of Ministers.
It was noted that the decision was taken "to keep stableness on the home market".
The National Rice Union has declared that the cereal stocks are adequate to fill only the home market. At the same time, the executive manager of the organization, Mikhail Radchenko, said that due to late harvests the quality of the current rice harvest is worse than last year, which could affect the volume of production. The Ministry of Agriculture assures us that it sees no reason for rice prices to rise. However, any retailers talk about a possible increase in rice prices by 10-30% in the summer.
Place 6 – China displaces Russia from Central Asia.
China became Kazakhstan's main trading partner, displacing Russia.
Since the beginning of the year China's participation in abroad trade operations of the Republic of Kazakhstan has reached 19.2%, while Russia accounts for 18.8%.
From January to May, according to Kazakh data, the volume of trade with China increased by 21.6% in cash, to USD 10.7 billion, in the same period of 2022 the trade turnover amounted to USD 8.8 billion.
In March, Financial Times reported on Kazakhstan's plans to introduce an import and export accounting strategy to prevent circumvention of sanctions against Russia. Later, the Republican authorities reported that as of 1 April, they introduced a request to attach invoices for goods in trade with the countries of the Eurasian economical Union (except Kazakhstan, Russia, Belarus, Kyrgyzstan and Armenia), which should prevent the emergence of "nominated, fictitious customers and consignors of goods, bankrupts, liquidated persons and so on" during transit.
Let us remind that China's trade with Central Asian countries in 2022 increased from US$41.9 billion to US$70.2 billion, Russia besides increased trade with the region from US$35.7 billion to US$42 billion, mainly through parallel imports.
This year, it is forecast that the turnover in this region will exceed US 100 billion and the countries of central Asia will further increase economic, business and political links with China.
Place 5 – Profitability of manufacture in Russia
The average profitability of industrial companies in Russia presently corresponds about to pre-pandemic levels in 2018-2019, and the industry's profitability is "mostly positive" thanks to government orders and production for defence industry, Experts note that profitability in 2023 is beginning to decline. The main reason is inflation and increased costs.
CMASF experts calculated profitability in 24 industries for the first six months – the 4th fourth of 2022 and the first 4th of 2023, comparing it to the pre-COVID level. The authors applied the profitability ratio of production (profit/loss ratio before taxation in manufacture and production volume), multiplied by return on working capital (current capital ratio to production).
The average in the manufacture was 18%. In most activities, profitability either increased or remained above 10%. The 10% threshold is considered to be a safe level for the current economical condition, as this is the lower limit of the conditional level of risk-free profitability.
The most unprofitable was the automotive industry, where profitability was minus 11%, falling by 17 percent points compared to the pre-COVID period. In second place, there is processing of wood (minus 4.9%, 9.5 percent points worse).
Also red is the production of another vehicles (these, as CMASF points out, include railway, air transport, ships, military combat vehicles), where profitability was minus 2%. There has besides been an increase in costs in the sector, but it has been essential to adapt to the simplification of imports of key components, which was peculiarly strong in the aviation manufacture and in rail engineering," the authors explained.
Profitability is low (from 5 to 10%) in the production of computers, electronic and optical products and device production.
CMASF notes that any imported components are rejected as counterfeit due to the transition to unauthorized deliveries. On the consumer market, branded goods are replaced by cheaper Chinese analogues
"In the mechanical engineering manufacture there are difficulties with components. Costs have increased objectively, including the low purchasing power of consumers. Moreover, government procurement is indexed to inflation levels which may not correspond to the actual cost increase "- explained Salnikov.
Electricity producers and coal extraction have improved their profitability. Defence production is equally high.
Rosstat data show that industries specified as the production of computers and optics, finished metallic products and another vehicles have been leading in terms of production growth since 2022. So in the first half of 2023, Compared to the same period of the erstwhile year, industrial production in the finished metallic manufacture increased by almost 30%, another vehicles – by 22%, computers, electronics and optics – by 30%, according to Rosstat data published on 26 July. Overall, the volume of industrial production in Russia increased by 2.6% in the first half of the year.
I urge you read Perspectives of the Russian defence manufacture (economy.pl)
Place 4 – transportation of Chinese passenger cars to Russia increased by 543%8
Exports of passenger cars and trucks from China to Russia in the first half of 2023 increased importantly to US$4.6 billion and US$1.7 billion respectively. China's share of Russian car imports exceeded 70%
In June 2023 deliveries amounted to USD 1.03 billion, most since the beginning of the year (in May it was USD 809 million), according to statistic of the General Administration of Customs of the People's Republic of China.
According to customs data, during the period January-June China exported 325,8 1000 cars and another motor vehicles for the transport of people to Russia, which is 5 times more than in the period January-June 2022 (64.6 1000 units).
In the first 5 months of the year China sent 287 159 cars (including trucks and buses) to Russia, had previously reported the Chinese car Manufacturers' Association (CAAM), making Russia the largest export marketplace for Chinese cars (Mexico is second, art).
Let us remind that due to sanctions the production of passenger cars in Russia decreased by 67% in 2022. Currently, the production of cars in Russia is besides based on Chinese components. We should be talking about assembly alternatively than actual production. In 2024, the automotive marketplace will be completely dominated by Chinese products.
Place 3 — Oil
Russia managed to reduce the Russian oil discount to Brent to little than $15 per barrel, said energy minister Nikolay Szulginov in an interview with TASS.
"The discounts are already tiny and in any areas they are very low. Overall, they are now under US$15". The only thing that affects production volume is the OPEC+ agreement on voluntary simplification in production and exports of oil", he said.
The central bank maintained a forecast Ural price of US$55 per barrel at 2023.
The decline in oil refining in Russia is besides associated with refinery repairs and repairs, in spite of being linked to attacks and sabotage of peculiar services of Ukraine. We know any of it and any of it remains a mystery.
For example, there was an detonation in the oil refinery in Samara last week. Mr Alexander Chinsztejn announced this. According to preliminary information, an explosive was planted and detonated in the plant. There were no casualties.
Later, the MP said the fishy was detained by FSB officers in the Orenburg region erstwhile he attempted to leave for Kazakhstan. According to preliminary information, the detainee worked in this plant, moved to Russia from the territory of Ukraine.
Estimates say Russia will reduce production and export of oil and products by 1 million-2 million.
Place 2 — Food for rubles
The draft decree of the president of Russia on payments for products of the agri-industrial complex in national currencies is presently being discussed in the government, said Deputy Prime Minister Victoria Abramchenko. The paper will shortly be sent to Vladimir Putin.
The Deputy Prime Minister pointed out that the Decree on payments for gas supplies in rubles with "unfriendly countries" is presently in force. A akin paper is essential for the agri-industrial complex. According to Mrs Abramchenko, it will be possible to simplify the access of friendly countries to the food market.
The task is called “A peculiar procedure for beginning current accounts in authorised banks by abroad buyers of Russian agricultural products”
The paper provides for the anticipation to open peculiar ruble accounts of kind ‘Z’ and peculiar currency accounts of kind ‘Z’ to let buyers of Russian agricultural products. The list of products for which payment will be made in national currency will be determined by the government.
I remind you that according to the Russians, the national currency for Africa is Juan.
More on this subject:
Place 1 – Inflation in Russia is inactive spreading.
Further inflation readings in Russia by John Hopkins University confirm that inflation is accelerating. In the latest study we see more than 3% increase in the index.
The Russian government besides reports an increase in inflation. Inflation in Russia year to year amounted to 4.19%, according to the Ministry of economical improvement in a study on the current price situation for the period from 18 July to 24 July. Let's remind you that only 2 months ago, the data was half as low.
In July, the authoritative median inflation expected by businesses and the population besides increased to 11.1% (from 10.2% in June), reported the Russian Bank on 25 July. In particular, the price expectations of companies increased, resulting in a decrease in ruble, an increase in costs and an increased hazard to operations. According to the Central Bank forecast, given the ongoing monetary policy, inflation will be reduced to 6.5% in 2023.
The main currencies returned to growth on Friday and the increases reached 2%.
Currency deposits data are interesting.
The abroad exchange deposits of individuals in the Russian banks in June decreased by US$1.2 billion to US$48.4 billion, while since February 2022 they decreased by half, Maxim Osadchy, head of the analytical department of Bank BKF, calculated for RIA Novosti based on Central Bank data.
The analyst called the main direction of the outflow of abroad currency deposits to flow abroad, to deposits in abroad banks, and the second most crucial direction is the flow into the cash currency. According to the latest available data, Russian currency deposits in abroad banks have increased by US$43 billion since February 2022 and the volume of cash by US$ 12.5 billion.
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