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All major US and most APAC equity indices closed lower, while
Europe was mixed. US and benchmark European government bonds closed
modestly lower. iTraxx-Europe and CDX-NAIG closed flat, while
iTraxx-Xover and CDX-NAHY were slightly wider on the day. The US
dollar closed higher, while oil, natural gas, gold, silver, and
copper were all lower on the day. All eyes will be focused on
tomorrow's pivotal FOMC meeting to better gauge the degree of the
shift in the Fed's concerns over inflation risk.
Please note that we are now including a link to the profiles of
contributing authors who are available for one-on-one discussions
through our Experts
by IHS Markit platform.
Americas
All major US equity indices closed lower for a second
consecutive day; DJIA -0.3%, S&P 500 -0.8%, Russell 2000 -1.0%,
and Nasdaq -1.1%.
10yr US govt bonds closed +3bps/1.45% yield and 30yr bonds
+3bps/1.83% yield.
CDX-NAIG closed flat/54bps and CDX-NAHY +4bps/312bps.
DXY US dollar index closed +0.3%/96.57.
Gold closed -0.9%/$1,772 per troy oz, silver -1.8%/$21.92 per
troy oz, and copper -0.6%/$4.26 per pound.
Crude oil closed -0.8%/$70.73 per barrel and natural gas closed
-1.2%/$3.75 per mmbtu.
US producer prices for final demand increased 0.8% in November
and rose 9.6% from a year earlier. All six major components scored
large gains, with trade and other services with the weakest gains
at 0.6%. Energy, up over 10.0% in just the past three months, led
the pack with a 2.6% increase. (IHS Markit Economist Michael
Montgomery)
Final demand prices for services grew 0.7% in November, that
component's largest gain since July. Transportation and warehousing
prices climbed 1.9% but the October increase was revised lower. The
other services complex as well as trade scored 0.6% gains.
The rise in energy prices was dominated by natural gas with a
2.0% gain and gasoline up 7.3%; the gasoline spike partly came from
rising when it normally falls. Oil and oil product price gains were
mixed outside of gasoline. Since crude costs have fallen gasoline
prices should fall in December, but that would be cold comfort to
drivers who saw wholesale gas prices double that of a year earlier
in November.
Bottom line: Inflationary pressures persisted once again and
will continue to persist so long as the supply chain is in shambles
and energy and food prices are running wild. The price increases
have become both chronic and large, with few companies deferring
small increases to the end or middle of the year because the gains
are no longer small. It will take more than a small change to break
price expectations in business, but gains can slowly moderate.
Federal Reserve officials meet Tuesday and Wednesday for the
first time since Chairman Jerome Powell said last month that the
central bank needed to shift its focus toward preventing higher
inflation from becoming entrenched and away from fostering a rapid
rebound in hiring from the pandemic. The pivot raises the prospect
that the Fed's post-meeting statement—a document parsed by
markets as a signal of likely future policy—could be overhauled
at the conclusion of their meeting Wednesday. (WSJ)
The below graphs show the intraday reaction of 10yr US
government bonds to the FOMC post-meeting statement and Fed
Chairman Powell's press conference during each of the 2021 FOMC
Meetings. 10yr UST's rallied during the first 28 minutes of the 3
November press conference (dark green line) before changing course
to end the press conference lower after already selling off 2bps
post-statement.
On December 14, Shell New Energies US LLC, a subsidiary of
Royal Dutch Shell plc, announced that it has signed an agreement to
buy 100% of Savion LLC, a utility-scale solar and energy storage
developer in the US, from Macquarie's Green Investment Group. (IHS
Markit PointLogic's Barry Cassell)
"Savion's significant asset pipeline, highly experienced team,
and proven success as a renewable energy project developer make it
a compelling fit for Shell's growing integrated power business,"
said Wael Sawan, Integrated Gas and Renewables & Energy
Solutions Director. "As one of the fastest-growing, lowest-cost
renewable energy sources, solar power is a critical element of our
renewables portfolio as we accelerate our drive to net zero."
Savion specializes in developing solar power and energy storage
projects and currently has more than 18 GW of solar power and
battery storage under development for a variety of customers,
including utilities and major commercial and industrial
organizations. It has over 100 projects under development in 26
states. The acquisition is expected to close by year end.
The Savion acquisition bolsters Shell's strategy to develop an
integrated power business as it moves to become a net-zero
emissions energy business by 2050. As part of this strategy, Shell
aims to sell more than 560 terawatt hours of power globally per
year by 2030, which us twice as much electricity as the company
sells today.
Savion's acquisition will expand Shell's existing solar and
energy storage portfolio, where Shell holds interest in developers
such as Silicon Ranch Corp. in the US. Savion is based in Kansas
City, Missouri, and currently employs 126 staff.
On December 14, the Florida Department of Environmental
Protection issued a draft air permit that would allow Florida Power
& Light (FPL) to test hydrogen as a supplemental fuel for the
natural-gas-fired Okeechobee Clean Energy Center (OCEC). This power
plant is located in Okeechobee County, approximately 27 miles
north-northeast of Okeechobee and 24 miles west of Vero Beach. OCEC
primarily consists of Unit 1, which is three combustion turbines
(CTs) each connected to a heat recovery steam generator (HRSG),
which are then connected to a single steam turbine electrical
generator (STEG) in a "3- on-1" combined cycle configuration. Each
individual CT of Unit 1 has a nominal gross capacity of 350 MW. The
unfired HRSGs generate steam from the hot exhaust gases of the CTs
that goes to the STEG to generate an addition 550 MW for a total
nominal generating capacity of 1,600 MW (net). The CTs are
primarily fueled with natural gas, with ultra-low-sulfur diesel
(ULSD fuel oil) as a limited-use backup fuel. (IHS Markit
PointLogic's Barry Cassell)
"FPL submitted an application requesting authorization from the
Department to allow the firing of a blended fuel consisting of
natural gas and hydrogen in the General Electric (GE) Frame HA.02
combustion turbines (CTs) at the OCEC," said a permit support
document. "The CTs are Units 1A, 1B and 1C. The blend will consist
of up to 5 percent (%) hydrogen by volume with natural gas at a
minimum of 95% by volume."
The document added: "Hydrogen only has approximately 32% of the
heat content of typical natural gas (325 British thermal units per
cubic foot (Btu/ft3) versus 1,020 Btu/ft3). Consequently, at a
bended ratio of 95% natural gas and 5% hydrogen by volume, the
blended fuel will have a slightly lower heat content (985 Btu/ft3
versus 1,020 Btu/ft3 or 3.4%) when compared to pure natural gas.
The slight change in heat content should have a minimal effect on
pollutant emissions, especially when you consider that hydrogen
from the electrolysis of water will contain fewer impurities than
fossil fuel natural gas. Overall, the Department believes that any
effect on pollutant emissions from the FPL Cavendish NextGen
Hydrogen Hub will be negligible. However, the Department will
include a permit condition limiting the maximum amount of hydrogen
that can be blended into the natural gas to 5.0% by volume or
less."
United Airlines has become the largest airline in the world to
invest in hydrogen-fueled electric engines that manufacturer
ZeroAvia is developing for regional aircraft that can carry fewer
than 100 passengers. (IHS Markit Net-Zero Business Daily's Amena
Saiyid)
The Chicago-based airline's announcement came less than a
fortnight after it demonstrated that sustainable aviation fuels
made from woody waste and renewable feedstock can be used in
commercial airplanes without any operational problems.
Through a new equity stake in ZeroAvia, United said it had
agreed to a conditional purchase of 100 aircraft engines known as
ZA2000. These engines would be powered by 100% hydrogen fuel cells
and capable of producing between 2,000 and 5,000 kilowatts of power
with a 500-mile range.
Hydrogen-electric engines use electricity created by a chemical
reaction in a fuel cell to power an electric motor instead of
burning a fossil fuel. Because no fuel is burned, there are no
climate-harming emissions or carbon released into the atmosphere
when the engines operate.
United's aim is to retrofit its regional jet fleet with
ZeroAvia's hydrogen powertrains as early as 2028, placing it
squarely on its net-zero path. This includes plans to halve its
carbon intensity compared with 2019 by 2035.
The California regulator has suspended Pony.ai's driverless
testing permit following an accident, reports Reuters. This is the
first time the regulator has issued such a suspension, but this
does not affect Pony.ai's permit for testing with a safety driver.
According to a report filed with the California Department of Motor
Vehicles (DMV), a Pony.ai vehicle driving in autonomous mode struck
a road center divider and a traffic sign in Fremont after turning
right on 28 October. Pony.ai said there were no injuries and no
other vehicles were involved in the accident. The suspension comes
only six months after Pony.ai became the eighth company to receive
a driverless testing permit in California. Pony.ai has now launched
autonomous vehicle (AV) tests in seven cities in China and the US.
(IHS Markit Automotive Mobility's Surabhi Rajpal)
Following US lawmakers' approval last month of USD7.5 billion
in funding for a national network of electric vehicle (EV)
chargers, US Joe Biden's administration released yesterday (13
December) an 'Electric Vehicle Charging Action Plan' for deploying
the funds and enabling the process. According to a document
released by the White House, the plan includes establishing a Joint
Office of Energy and Transportation. The aim of the new office is
to ensure the Department of Transportation (DOT) and the Department
of Energy (DOE) work together on implementing the charging network
plan and other electrification provisions in the administration's
infrastructure law, as well as to co-ordinate the federal strategy
and the provision of resources to states, communities, and
industry. In addition, the White House intends to publish guidance
and standards for states and local governments relative to EV
charger deployment no later than 11 February 2022. The
administration says that it is already working on the guidance,
which will cover where states and cities need to "strategically
deploy" EV charging stations as part of a national network on the
highway system. The guidance will also cover where there is EV
charging and where it is needed, including for the disadvantaged
and rural communities, and the ensuring of smart connections to the
electric grid. In addition, a new Advisory Committee on Electric
Vehicles is to be appointed in the first quarter of 2022, after
"convening a series of initial stakeholder meetings" to cover
partnerships with state and local government, domestic
manufacturing, equity and environmental justice, civil rights, and
partnering with tribal communities and others. In addition, no
later than 13 May 2022, the US administration intends to publish
standards for EV chargers to ensure safety, reliability, and
accessibility. The administration has a key target of ensuring that
as much of the EV charging network as possible is produced in the
US. To meet that goal, the DOT and the DOE have requested
information from manufacturers, automakers, and labor
representatives. The new plan includes further efforts to support
US battery manufacturing, including on raw materials sourcing and
recycling. The investment plan in a more-robust EV charging network
is significant in terms of the amount of money involved, but also
because the objectives include creating a network that is more
consistent than currently. Developing the charging infrastructure
necessary to support a transition to EVs is not something
automakers are positioned to take on themselves, despite Tesla's
Supercharger network. A robust system will need both public and
private investment. (IHS Markit AutoIntelligence's Stephanie
Brinley)
The governments of Nicaragua and mainland China signed on 9
December an agreement to establish full diplomatic relations after
Nicaragua broke official ties with Taiwan. Nicaraguan President
Daniel Ortega said that the alignment with mainland China was based
on ideological reasons and his affinity with the Chinese Communist
Party. Following Nicaragua's termination of diplomatic relations
with Taiwan, mainland China on 12 December announced the delivery
of 200,000 doses of the COVID-19 Sinopharm vaccine to Nicaragua.
Taiwan has donated to Nicaragua approximately USD200 million since
2007. It has also been a major funding source of the Central
American Bank for Economic Integration (CABEI), an entity that
provided Nicaragua with an estimated USD2.2 billion between January
2017 and June 2021. The timing of Ortega's decision overlapped with
the United States' hosting of the first Summit for Democracy, to
which Nicaragua was not invited. Nicaragua's deteriorating
relationship with the US was further confirmed by US President Joe
Biden, who, on 10 November, ratified the Reinforcing Nicaragua's
Adherence to Conditions for Electoral Reform (RENACER) Act, which
strengthens sanctions against Nicaragua, imposing reinforced
limitations and oversight mechanisms for multilateral loan
approvals. (IHS Markit Country Risk's Veronica Retamales
Burford)
Europe/Middle East/Africa
Major European equity indices closed mixed; Spain +0.7%, Italy
0%, UK -0.2%, France -0.7%, and Germany -1.1%.
10yr European govt bonds closed lower; Germany +1bp,
France/Italy/Spain +2bps, and UK +3bps.
iTraxx-Europe closed flat/52bps and iTraxx-Xover
+2bps/259bps.
Brent crude closed -0.9%/$73.70 per barrel.
The Volkswagen (VW) Group will create a new separate company to
host its European battery business, and it will also invest EUR2
billion in its German battery hub which will be based in
Salzgitter. The Salzgitter site, which already hosts VW's main
battery R&D center and is the location for an already announced
battery Gigafactory that is under construction, will be rolled into
the new company which will be headquartered there. The company's
scope will include 'developing new business models based around
reusing discarded car batteries and recycling the valuable raw
materials', in addition to battery production, R&D and raw
material processing. The site will combine development, planning
and production functions control in one location, and will thus
become the VW Group's battery center. VW is making a clear
investment in its future in the creation of this company with this
announcement fleshing out the battery information from last week's
planning round announcement. Europe's largest carmaker is looking
to control the supply chain and value chain of the batteries that
it is using in its massive ramp up in its electric vehicle (EV)
range, with the automotive semiconductor supply shortage showing
only too starkly how vulnerable OEMs are in terms of their reliance
on outside suppliers and supply chain disruption. The aim is to
create a futureproof structure and organization that VW has control
over and which will act as the foundation to the company's BEV
push. As previously announced, VW is planning to add four more
Gigafactories in Europe by the end of 2030 to complement the two
already announced in Salzgitter and Skellefteå. (IHS Markit
AutoIntelligence's Tim Urquhart)
Valeo has integrated its second-generation LiDAR, Valeo Scala,
into the new Mercedes-Benz S-Class sedan, according to a company
statement. This will enable the S-Class sedan to reach Level 3
automation, allowing the car to drive in conditionally automated
mode under controlled conditions. Valeo claims that this car will
be the first in the world to be equipped with its second-generation
LiDAR. (IHS Markit Automotive Mobility's Surabhi Rajpal)
Bulgaria's 2021 essential oil production is expected to reach
400 tons, a 10-year record-low, due to low rose and lavender crops.
Low yields, labor shortages and high production costs have been the
drivers of the fall. (IHS Markit Food and Agricultural Commodities'
Jose Gutierrez)
The rose petal crop fell by 40% y/y to 10,000 tons in 2021 due
to low paid prices after several years with large outputs. The
Bulgarian research firm explained that growers have been dependent
on EU subsidies to cover production costs. However, large farmers
may receive a premium price as processors cannot match the global
demand.
The 2021 lavender crop reached 82,000 tons. This volume is
within the Bulgarian average although the yield was extremely low
due to unfavorable weather and high prices for fertilizers. The
planted area reached a record of 18,000-21,000 hectares.
The lavender oil production is expected to be behind 400 tons,
far from the record of 500-600 tons achieved in previous
years.
The lira's sharp losses contributed to the largest
current-account surplus in a single month in Turkey. However, net
outflows of portfolio investment are putting downward pressure on
the currency, raising external financing questions and drawing down
foreign currency reserves. In 2022, the current account is expected
to move back into deficit, although it will be a smaller one than
previously assumed. Net portfolio outflows will persist as long as
rate cuts continue. (IHS Markit Economist Andrew
Birch)
For the third consecutive month, Turkey posted a
current-account surplus in October 2021 according to data from the
Central Bank of the Republic of Turkey (TCMB). In October, the
surplus of USD3.156 billion was the largest in a single month in
the country's history.
The sharp lira fall has improved Turkish export
competitiveness, contributing to a 34.1% year-on-year (y/y)
increase in merchandise trade growth in January-October 2021.
Meanwhile, the recovery in tourism service exports in 2021 -
although they remain well below pre-pandemic levels - led to a
61.9% y/y surge of total service exports in that same period.
The historically large surplus in October cut the 10-month 2021
cumulative deficit to just USD8.426 billion, down more than USD20
billion from the same period a year earlier. Along with the
improved merchandise and service balances, Turkey received net
transfer inflows due to bilateral aid to support the TCMB in its
efforts to stabilise the lira. Government net inward transfers
reached nearly USD500 million, up from just USD65 million in
2020.
In the financial account, however, Turkey's net portfolio
investments turned outward in October, reaching USD2.2 billion.
Portfolio investment was outward on a net basis for the first time
since April. The beginning of the TCMB's rate-cutting cycle at the
end of September prompted a sharp outflow of bank debt security
investments as returns on investments fell with the rate cuts. The
sharp lira losses in October reflected the shifting flow of net
capital.
Turkish industrial production growth remained sluggish in
October, yet to respond to the government's efforts to stimulate
domestic economic activity. Although total industrial output was
well up from year-earlier levels due to base effects, production
edged up by only 0.6% month on month (m/m) in seasonal and
calendar-adjusted data. Output was lower than it had been in August
and was up just 1.2% as compared to June. (IHS Markit Economist Andrew
Birch)
Similarly, the retail trade data for October also showed that
consumer activity did not immediately positively react to the rate
cutting cycle that began in late September. Again, base effects
have total retail trade activity well above year-earlier levels,
but in seasonal and calendar-adjusted data, retail sales grew by
only 0.9% m/m. After surging ahead in June following the relaxation
of coronavirus disease 2019 (COVID-19)-related lockdown measures,
retail trade has failed to increase by more than 2% m/m since.
Beginning in late September, Turkish authorities have
aggressively attempted to stimulate domestic economic activity. The
Central Bank of the Republic of Turkey (TCMB) cut the main policy
rate by 400 basis points. Credit growth has skyrocketed, from less
than 14% annually as of late September to over 35% annually as of
early December.
Moreover, official unemployment has pushed downward since June,
falling to 10.7% as of October, with total employment having
expanded m/m in eight of the first ten months of the year.
Prime Minister Ali Asadov's government has submitted for
legislative consideration a package of amendments to the Tax Code
that aim to attract investments in the extractive sector. The main
measure is a proposed 75% reduction of land tax for projects
related to geological exploration, assessment of subsoil resources
and reconnaissance of potential mineral deposits. The proposed
amendments do not apply to oil and gas. The measure appears
designed to encourage investments in mining projects - notably for
gold - in the territories over which Azerbaijan re-established
control after the 44-day hostilities with Armenia over the
breakaway region of Nagorno-Karabakh in 2020. Most of the gold
deposits in the newly regained territories are concentrated in the
Zangilan (Vejnali deposit) and Kelbajar (Soyudlu and Agduzdag
deposits) districts, where the government estimates gold reserves
of roughly 6.5 and 143 tons respectively. In May, President Ilham
Aliyev granted the Turkish mining company Artvin Maden A.Ş. the
right to develop Agduzdag gold mine. On 2 December, the British
mining company Anglo Asian Mining Plc (London-listed, ticker
symbol: AAZ) received a permit to develop the Vejnali gold mine.
The development of the non-oil extractive sector is a strategic
priority for the Azerbaijani government, as it strives to diversify
its economy away from dependence on hydrocarbon resources. At
present, only two mining companies export gold from Azerbaijan -
the state-owned conglomerate AzerGold and Anglo Asian Mining Plc.
The government is keen to increase the number of foreign mining
companies operating in Azerbaijan, but the presence of unexploded
ordnance and landmines left by the Armenian forces in the newly
regained territories is likely to slow geological exploration. (IHS
Markit Country Risk's Alex
Melikishvili)
Saudi Arabia's fiscal revenues are projected at SAR1,045
billion (USD278.7 billion) for 2022, an increase of 12.4% compared
with the currently estimated revenue outcome for 2021 and a 23.1%
rise over the revenue that was penciled in the original budget
draft a year ago. The finance ministry revealed this data in a
budget statement on its website. (IHS Markit Economists Jack
Kennedy and Ralf
Wiegert)
Tax revenues account for SAR283 billion, including SAR223
billion in taxes on goods and services (mostly value-added tax),
while so-called other revenues account for SAR763 billion. The
latter category includes oil revenues, which are no longer
separated out since Saudi Aramco went public. Combined with an
average projected oil output of 10.2 million barrels per day
(Mb/d), IHS Markit believes that the Saudi government calculates
with an average oil price of USD70-USD75 per barrel in the budget
for 2022.
Moreover, the revenue side also benefits from robust economic
growth in 2022. The budget statement anticipates growth to reach
7.4% on the back of a strong rebound of oil output; however, the
non-oil economy is on the recovery path as well. IHS Markit's
Purchasing Managers' Index (PMI, covering the entire non-oil
economy) moderated to 56.9 points in November, the second month of
a decline following a post-pandemic high in September; the November
level shows a solid rate of expansion in the Saudi economy,
though.
The spending side of the budget is projected to shrink relative
to 2021. In 2022, total spending is expected to amount to SAR955
billion, unchanged from the figure that was previously published in
the medium-term budget strategy. Against the estimated outcome in
2021, though, spending is expected to decline.
The budget statement a year ago was still driven by the
prevailing low oil price environment, but circumstances one year
later have profoundly changed. Although the spending allocated for
investment in the budget is still expected to decline in 2022, the
broader level of investment outside of the budget (but under the
auspices of government-related agencies and companies) is expected
to level up by 12% for the domestic economy in 2022 compared with
2021.
Asia-Pacific
Most major APAC equity indices closed lower except for
Australia flat; India -0.3%, South Korea/Mainland China -0.5%,
Japan -0.7%, and Hong Kong -1.3%.
China's Zhejiang Tiansheng Chemical Fiber has slashed its
polyester production to 65% of full capacity on Tuesday, two
sources told OPIS. This production cut was due partly to tight
COVID-19 restrictions on Shaoxing City, said both sources.
Inventory pressure played another part, they added. (IHS Markit
Chemical Market Advisory Service's Chuan Ong)
"Restrictions in the Shaoxing area are more severe than those
in Zhenhai. Today, the new COVID cases reported were mostly from
the Shaoxing area," said one source, a fellow polyester producer
based in Xiaoshan City.
OPIS reported that tight restrictions on vehicular passage
through virus hotspots have impacted commodities logistics, with
plants like Ningbo Zhongjin nearly shutting down as a result.
Tiansheng Chemical Fiber is based in Keqiao District, part of
Shaoxing City. Shangyu District, also in Shaoxing, remains in a
state of lockdown.
Keqiao District has not been locked down amid disease spread,
but is in a state of heightened control, said a market analyst from
Hangzhou City.
Zhenhai District, the first district to be locked down in this
wave of infections, is further away, part of Ningbo City. Both
Shaoxing City and Ningbo City are in China's Zhejiang
Province.
"Tiansheng also pondered its high product inventory before
initiating this production cut. Foremostly of course, all polyester
producers in Shaoxing have been impacted by the emergency
measures," said the polyester maker.
The analyst said that Tiansheng has cut production by 35%, to
65% at its 1.2-1.4 million mt/yr polyester plant.
The company will further slash its production by another 15% to
50% at the beginning of January, the analyst added.
Geely Auto announced on 13 December that it has entered an
agreement with Lifan Technology on the formation of a new joint
venture (JV) in China. The JV will be engaged in design,
development and sales of vehicles as well as development of related
software and technologies. Each party will hold a stake of 50%.
Geely's subsidiary, Geely Technology, holds 28.98% of Lifan
Technology, formerly Lifang Industry (Group). Lifan had been
suffering both poor vehicle sales and financial performance before
Geely and Chongqing-government-backed Liangjiang investment fund
joined forces to invest in it. The announcement of the new JV
indicates the two companies are speeding up their plans in the
development of battery swappable EVs. In May, Lifan began Chinese
production of its first electric model, the 80V, which features a
swappable battery. (IHS Markit AutoIntelligence's Abby Chun
Tu)
Toyota has unveiled its battery electric vehicle (BEV) strategy
aimed at achieving carbon neutrality on 14 December (today). The
automaker revealed 16 Toyota and Lexus BEV models that it is
readying for market launch, including the all-new Toyota bZ4X due
next year. Talking about Toyota's strategy, Toyota's president,
Akio Toyoda, announced that the company plans to introduce 30 BEV
models and is expecting sales of 3.5 million BEVs globally by 2030.
The Lexus brand aims to have BEVs account for 100% of total sales
in Europe, North America, and China by 2030. It also aims for BEVs
to make up 100% of its global vehicle sales in 2035. The president
highlighted the difference between "carbon-reducing" and
"carbon-neutral" vehicles, and that Toyota is focused on developing
and producing carbon-neutral vehicles that run on clean energy and
achieve zero emissions in the whole lifecycle. Working in this
direction, the company has kept a target to achieve carbon
neutrality at its manufacturing plants by 2035 by expanding the use
of innovative production engineering technology. Toyota has
accelerated its push to further electrify its line-up in recent
months. In May, it announced that it intends for battery and
fuel-cell electric vehicles (BEVs and FCEVs) to make up 15% of its
US sales by 2030, and for electrified vehicles to make up 70% of US
sales by 2030. (IHS Markit AutoIntelligence's Nitin Budhiraja)
Volkswagen (VW) Passenger Cars India hopes to double its
used-car sales volume this year to 20,000 units, reports the Times
of India, citing VW India brand director Ashish Gupta. According to
the report, Gupta said, "In the past almost two years, the one
clear shift in customer preference I see is that customers are
going for additional cars. That's driven by the need for individual
mobility. So, people who can afford to buy a car again are more
likely to buy an additional car. Last year, we sold close to 10,000
pre-owned cars. This year, we are on track to sell 20,000. So,
that's the kind of uptick we see." VW India entered the used-car
market in 2012 with the opening of its first Das Welt auto
showroom. The automaker launched multi-brand Das WeltAuto (DWA) 3.0
in June 2020 to facilitate buying and selling of used cars after
the COVID-19 pandemic hit the country. Demand for used cars has
increased due to the greater need for personal mobility since the
pandemic, as well as due to the ongoing semiconductor shortages
that have affected the supply of new cars by automakers. (IHS
Markit AutoIntelligence's Isha Sharma)
Kia India has confirmed that it is to enter the used-car
business in the country in 2022, reports Autocar. Commenting on the
plans, Hardeep Singh Brar, Kia India president and head of
marketing and sales, said, "We are also planning to get into the
used car market. Come 2022, when our cars will turn about three
years old, it'll be the right time to start [with our used car
business], especially in the bigger towns." Brar added, "If you
look at the scenario today, what I understand is that the used car
market is about 1.4 times the new car market and, come 2025, this
is projected to be almost two times the new car market. So there is
tremendous potential that we can see in this area." The Indian
used-car market is largely unorganized, but several OEMs have a
presence in the segment, including Maruti Suzuki, Mahindra &
Mahindra (M&M), Hyundai, Toyota, BMW, Audi, and Jaguar Land
Rover (JLR). There are also online sales platforms such as
CarDekho, Cars24, and Droom. Last year, MG Motor launched its
used-car program MG Reassure. Kia will join the list of automakers
that have entered the pre-owned car business in a bid to leverage
potential revenues. The latest development also comes as demand for
used cars has increased due to the need for personal mobility since
the COVID-19 pandemic, as well as due to the ongoing semiconductor
shortages that have affected the supply of new cars by automakers.
(IHS Markit AutoIntelligence's Isha Sharma)
Australia's dairy exports in the 10 months to October 2021,
increased by 12% y/y in volume and 27% y/y in value, thanks to
steady global demand for its milk powders. According to the latest
trade data, total exports totaled 396,200 tons in January-October,
a new record which is some 150 tons higher than volumes in the same
period of 2017. Total value surged to US$1.8 billion. (IHS Markit
Food and Agricultural Commodities' Jana Sutenko)
The largest increase in volume exports was seen in the category
of milk powders, specifically SMP, which rose 15% y/y to 121,700
tons. Less sizeable were exports of WMP, which were up 54% y/y to
40,000 tons.
Significant gains were also registered in the supplies of
butterfat, up 61% y/y to 20,200 tons. Whey was the only commodity
to see a slip in January-October, down 6% y/y to 27,000 tons.
Fonterra Australia and Saputo Dairy Australia have both lifted
farmgate milk prices to AU$7.05 per kgMS in the southern regions of
the country, therefore adjusting upward the prices set out in
Juna.
Rabobank said there is potential of more increases due to
benefit of exporters from higher commodity prices, especially for
SMP.
There are, however, lingering headwinds for local exporters
given the weaker-than-expected spring flush and supply chain bottle
necks. Therefore, Rabobank has revised its forecast farmgate milk
price for 2021/22 to AU$7.75 per kgMS, underpinned by rising
commodity prices and weaker currency.
The Philippines has taken a step towards its climate goal by
offering electricity users more options for purchasing renewable
power, but experts say further utility market reforms are required
to put the coal-reliant country firmly on a greener path. (IHS
Markit Net-Zero Business Daily's Max Lin)
In an effort to achieve a national target of cutting GHG
emissions by 75% from a business-as-usual cumulative level of 3.34
billion metric tons in 2020-2030, Manila introduced the
long-awaited Green Energy Option Program (GEOP) to promote
renewable power expansion.
Under the GEOP, electricity users with a monthly average peak
demand of 100 kW or higher can opt to acquire purely renewable
energy in their supply contracts from 3 December.
"By allowing commercial and industrial customers freedom to
choose 100% renewable energy, the GEOP offers a modest, incremental
improvement in offtake options," Simon Cowled, a Singapore-based
partner of law firm King & Spalding, told Net-Zero Business
Daily.
Filipino power users had only been able to acquire renewable
electricity though on-site installations, or, if their average peak
demand exceeded 500 kW per month, sign power purchase agreements
via the Retail Competition and Open Access (RCOA) program. Launched
in 2013, the RCOA is the first Filipino electricity marketspace
that offers off-site purchases.
Isabella Suarez, a Philippines-based analyst at the Centre for
Research on Energy and Clean Air, said the RCOA failed to promote
the green transition much as it did not guarantee all energy could
come from renewable sources. But she suggested the GEOP could play
a bigger role in the country's green drive.
In July, Toyota Motors, Yokohama Tire, and some multinationals
teamed up with Filipino energy suppliers like Ayala's AC Energy to
call for the full implementation of GEOP in a joint statement.
Posted 14 December 2021 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
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