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All major European and most US equity indices closed higher,
while APAC was mixed. US and most benchmark European government
bonds closed lower. CDX-NA and European iTraxx closed tighter
across IG and high yield. The US dollar, oil, and copper closed
higher, while gold, silver, and natural gas were lower on the
day.
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
Most major US equity indices closed higher except for Russell
2000 -0.2%; Nasdaq +1.9%, S&P 500 +1.3%, and DJIA +0.7%.
10yr US govt bonds closed +3bps/1.51% yield and 30yr bonds
+3bps/1.86% yield.
CDX-NAIG closed -2bps/55bps and CDX-NAHY -8bps/318bps.
DXY US dollar index closed +0.3%/96.34.
Gold closed -0.2%/$1,782 per troy oz, silver -1.3%/$22.80 per
troy oz, and copper +1.2%/$4.34 per pound.
Crude oil closed +2.6%/$69.95 per barrel and natural gas closed
-11.4%/$4.85 per mmbtu.
Moderna (US) announced an update to its strategy for dealing
with SARS-CoV-2 variants of concern following the emergence of the
Omicron variant. As stated in its press release, Moderna is working
to check whether the current 50 µg dose of its Spikevax (mRNA-1273)
vaccine used for booster vaccinations would remain effective
against the Omicron variant, with results expected in the next few
weeks. As stated by the company, it has already carried out tests
on 306 trial participants of a 100 µg booster dose, which have,
according to the company, "resulted in the highest neutralizing
titers against prior SARS-CoV-2 strains". It is now working to test
sera from recipients of the high booster dose to check whether this
dose would lead to superior protection against the new Omicron
variant. Additionally, it has reported that studies of two
multivalent booster candidates are already undergoing clinical
trials. These candidates include a number of mutations present in
the Omicron variant. Finally, it stated that it aims to move
forward quickly with a booster candidate specifically for Omicron -
mRNA-1273.529. The company asserted that it has already been able
to develop boosters specifically intended for the Beta and Delta
variants in 2021, succeeding in advancing candidates into clinical
testing in 60-90 days. Moderna's chief medical officer told the BBC
that it would be able to confirm whether Spikevax provided
protection against the Omicron variant within a couple of weeks,
adding that it would be early 2022 before a new vaccine could be
made available. He emphasized the flexibility of the mRNA
technology platform, which allowed for a very quick turnaround in
adaptions to an existing vaccine. (Life Sciences by GlobalData's
Brendan Melck)
Averaged over the last seven days, the count of seated diners
on the OpenTable platform was 4.0% below the comparable period in
2019. This is at the higher end of a recent range, perhaps
suggesting some modest improvement in restaurant activity.
Meanwhile, box-office revenues last week were 62.8% below the
comparable week in 2019, according to Box Office Mojo. The latest
weekly reading was below recent averages, which were up
considerably from spring and summer. The Thanksgiving holiday may
have affected the comparison with 2019, so we will look to upcoming
weeks to assess the ongoing recovery in movie-theater activity.
Finally, revenue per available room at US hotels over the week
ending 20 November, after seasonal adjustment, rose to 96.6% of the
mid-January 2020 level (estimate based on weekly data from STR).
This mirrors recent improvement in the airport passenger traffic
data, reinforcing the notion that key portions of the travel sector
have nearly fully recovered. (IHS Markit Economists Ben
Herzon and Joel
Prakken)
The US Pending Home Sales Index (PHSI) shot up 7.5% in October
from September to 125.2, its highest reading in 11 months. The
index is up 18% since May. All four regions saw month-on-month
gains. (IHS Markit Economist Patrick
Newport)
According to Lawrence Yun, the National Association of
Realtors' chief economist, "Motivated by fast-rising rents and the
anticipated increase in mortgage rates, consumers that are on
strong financial footing are signing contracts to purchase a home
sooner rather than later… The notable gain in October assures that
total existing-home sales in 2021 will exceed 6 million, which will
shape up to be the best performance in 15 years."
The Mortgage Bankers Association (MBA)'s Purchase Index
(four-week moving average)—which had been sliding since January
but turned three months ago, growing 13% since—is pointing to
higher sales in the fourth quarter than in the previous two
quarters.
The PHSI leads existing home sales by a month or two. The
latest two PHSI readings point to higher existing home sales in
November or December or both.
Pending home sales rose sharply in October, in contrast to IHS
Markit analysts' expectation for a decline, implying more brokers'
commissions and residential investment in the fourth quarter. As a
result, we raised the tracking forecast of fourth-quarter GDP
growth by 0.1 percentage point to 7.5%.
US Senate Democrats have reintroduced a bill to radically
overhaul the EPA's pesticide regulatory review process and force
the Agency to ban several pesticides linked to severe human health
risks and ecological harm. The legislation would compel the EPA to
prohibit the use of organophosphate and neonicotinoid insecticides
as well as the herbicide, paraquat. It also lays out a series of
sweeping reforms to strengthen the EPA's pesticide regulations and
increase protections for farmworkers. (IHS Markit Crop Science's JR
Pegg)
"As we sit down with family and friends for Thanksgiving, let
this day also be one of gratitude for the workers who have worked
tirelessly to ensure we have food on our tables," said Senator Cory
Booker, a New Jersey Democrat. "Farmworkers are often exposed to
dangerous and toxic pesticides, risking their health as they work
to provide our food. It is imperative that we address this issue
directly by updating our laws in order to protect farmworkers,
frontline communities, and our environment."
The 42-page bill says that the EPA "regularly fails to
incorporate updated scientific understanding to protect human
health and the environment from the harmful effects of pesticide
products" and allows the use of "billions of pounds of pesticides"
every year that were approved based on outdated science.
"The United States lags behind the European Union and other
developed nations in protecting its people and its environment from
toxic chemicals, allowing the use of 72 pesticides that have been
banned or are being phased out in the European Union alone," the
bill states, adding that once the EPA has approved a pesticide, it
is nearly impossible to get it off the market.
The legislation would also create a new process under the
Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) to allow
citizens to petition the Agency to identify dangerous pesticides
and remove them from the market. In addition, it seeks to limit the
EPA's ability to issue emergency exemptions and conditional
registrations for pesticides that have not gone through full health
and safety review.
As expected, Canada's current-account balance remained in
surplus for a third consecutive quarter. Although the headline
balance was almost identical to the previous quarter, trade of
goods and services played a much larger role. Reflecting the
consistent monthly merchandise trade surpluses, the goods trade
account reached its largest surplus since the third quarter of
2014. (IHS Markit Economist Evan Andrade)
The third-quarter balance of international payments hit a
surplus of $1.4 billion. The second-quarter surplus was revised
down from $3.6 billion to $1.4 billion, because of a much narrower
goods trade surplus than initially reported.
Total goods exports rose 4.9% quarter on quarter (q/q), as
energy product exports were aided by higher prices and strong
demand from the United States. Lower prices hurt forestry product
and building material exports. Although most categories increased,
the 3.1% q/q jump in goods imports was driven by a partial rebound
in automotive imports from the previous quarter.
With Canada's vaccination efforts slowing in the third quarter,
lower consumer goods imports were likely the result of reduced
pharmaceutical imports.
The widening services trade deficit was caused by a higher
vaccination rate and reduced travel restrictions. With a healthy
increase in Canadians travelling abroad, causing travel imports to
rise, the travel services surplus narrowed $784 million to $1.3
billion. Transport services also added to the wider services trade
deficit.
On November 29, Capital Power Corp. and Enbridge Inc. announced
a memorandum of understanding to collaborate on carbon capture and
storage (CCS) solutions in the Wabamun area west of Edmonton,
Alberta, near Capital Power's Genesee Generating Station. (IHS
Markit PointLogic's Barry Cassell)
Enbridge would serve as the transportation and storage service
provider and Capital Power as the CO2 provider for this project,
subject to the Government of Alberta's competitive carbon hub
selection process and a future final investment decision. Enbridge,
with the support of Capital Power, is applying to develop an open
access carbon hub in the Wabamun area through the Government of
Alberta's Request for Full Project Proposals process, which is
expected to start as early as December 2021.
Capital Power's Genesee Generating Station near Warburg
currently provides over 1,200 MW of baseload electricity
generation. Capital Power is currently repowering the Genesee 1 and
2 units with natural gas combined-cycle power generation units. The
Genesee CCS Project is expected to capture up to 3 million tons of
CO2 annually from the repowered units, which would be transported
and stored through Enbridge's open access carbon hub that could
also serve several other local industrial companies. Subject to the
award of carbon sequestration rights and regulatory approvals, the
proposed project could be in service as early as 2026.
In October, with Capital Power's support, Enbridge responded to
the Government of Alberta's call for Expressions of Interest to
construct and operate carbon storage hubs. Within its proposal,
Enbridge outlined its plans to develop an open access carbon
storage hub with cost-effective, customer-focused CCS solutions in
the Wabamun area while minimizing any infrastructure footprint to
protect land, water and the environment, the companies said.
Europe/Middle East/Africa
All major European equity indices closed higher; UK +0.9%,
Italy +0.7%, Spain +0.6%, France +0.5%, and Germany +0.2%.
Most 10yr European govt bonds closed lower except for Spain
flat; Italy/France +1bp, Germany +2bps, and UK +3bps.
iTraxx-Europe closed -2bps/56bps and iTraxx-Xover
-11bps/280bps.
Brent crude closed +2.3%/$73.22 per barrel.
UK Prime Minister Boris Johnson has announced new restrictions
in England to tackle the emerging COVID-19 variant called Omicron,
with early evidence suggesting that the heavily mutated virus is
more infectious than the highly contagious Delta variant. (IHS
Markit Economist Raj
Badiani)
Early data suggest that it transmits between people who are
double vaccinated, and research is under way to discover the
effectiveness of current vaccines against the new strain.
The World Health Organization (WHO) has labelled Omicron a
"variant of concern".
Several Omicron cases have been detected in the United Kingdom,
with Johnson urging that "we need to slow down the spread of this
variant here in the UK, because measures at the border can only
ever minimize and delay the arrival of a new variant rather than
stop it all together".
Travel restrictions are now tighter. All UK arrivals will have
to take a PCR test and self-isolate until they return negative
results. In addition, the UK has placed six countries on its red
travel list, and they are South Africa, Botswana, Namibia,
Zimbabwe, Lesotho, and Eswatini, with the prospect of the inclusion
of further countries. Therefore, all UK and Irish citizens or
residents arriving from those countries will have to pay to enter
hotel quarantine for 10 days, while all other travelers are
prohibited from the UK.
The economic sentiment indicator (ESI) for the eurozone showed
the first decline in four months in November, slipping from 118.6
down to 117.5, matching the market consensus expectation. The
breakdown by key sector, however, showed unusual divergence. (IHS
Markit Economist Ken
Wattret)
Consumer sentiment (accounting for 20% of the ESI) dropped by
just over two points, the fourth decline in five months and the
biggest for a year. Weakness was evident across all the main
sub-components in November, particularly the economic outlook and
unemployment expectations.
In contrast, services, retail, and construction sentiment
indices all improved in November and industrial sentiment was
unchanged at its second highest level on record. The industry
sub-survey of orderbooks, including for exports, remained elevated,
suggesting that recent supply-chain constraints on production have
not fundamentally damaged demand.
Eurozone employment expectations indices also held firm across
all key sectors in November, which is indicative of confidence
among businesses that economic prospects will remain favorable
despite the various growth headwinds at present.
At the member state level also, November's ESI data showed
pronounced divergence, reflecting recent COVID-19-related
developments. Sentiment fell markedly in Austria, the Netherlands,
and Germany, for example, where new cases have surged recently,
leading to the reimposition of restrictions, but improved in
France, Italy, and Spain.
Germany's Federal Statistical Office (FSO) reported, based on
data from various regional states, that the country's national
consumer price index (CPI) declined by 0.2% month on month (m/m) in
November. This smaller-than-usual seasonal dip drives up the annual
inflation rate from 4.5% in October to 5.2% year on year (y/y) in
November, a level not seen since the post-unification boom of 1992.
(IHS Markit Economist Timo
Klein)
The EU-harmonised CPI measure unexpectedly posted even firmer
data, as a 0.3% m/m increase boosted its year-on-year rate from
4.6% y/y to 6.0%. This is linked to the reduction in the weight of
package tours in the harmonized 2021 goods basket to only about
one-third of its weight in 2020, therefore its massive seasonal
monthly decline (-21.6% m/m) had much less of a dampening effect on
the CPI index compared with November 2020. Much of this distortion
will unwind in December (when package tour prices rebound because
of Christmas travel), and a likely upward revision in the weight of
package tours in January 2022 (based on 2021 spending patterns)
will reinforce this downward adjustment of the harmonized
year-on-year rate.
The detailed breakdown of the German national data will only be
published with the final numbers on 10 December, but components are
available, for instance, from the largest and most populous state
of North Rhine-Westphalia (NRW). The CPI in this state posted -0.3%
m/m, lifting its year-on-year rate from October's 4.5% to
5.1%.
In NRW, energy prices increased by 1.6% m/m, less than half of
October's 3.5% m/m. Nevertheless, the base effects boosted their
annual rate from 17.0% to 20.1%. Energy prices apart, upward
inflation pressure came from package tours (from 2.4% y/y to 9.7%
y/y, accounting for a 0.2% impact on total CPI), clothing/shoes
(from 0.8% to 1.6%), furniture and household goods (from 4.0% to
4.7%), healthcare (from 1.6% to 1.9%), and food (from 4.3% to
4.5%). Year-on-year rates of all other categories remained broadly
stable; there was no major offset to the downside.
Volkswagen (VW) Group is planning to make a further investment
into its Autoeuropa facility located in Palmela (Portugal) in the
medium term. ECO News quoted Alexander Seitz, the VW brand board of
management member with responsibility for Controlling and
Accounting, as saying, "Over the next five years we intend to
invest more than EUR500 million in product, equipment and
infrastructure." The senior executive added that VW will refocus
production at the site to support the growing momentum towards
sustainable mobility. (IHS Markit AutoIntelligence's Ian
Fletcher)
The Volkswagen (VW) Group will not tender a higher offer for
Europcar than the one currently on the table for EUR2.9 billion
(USD3.27 billion), according to a Reuters report. VW is the main
element of the consortium that is looking to acquire Europe's
biggest car hire firm, along with asset management business
Attestor Holdings and Dutch automotive conglomerate Pon Holdings.
If the acquisition goes through, VW will own the majority of the
business with Attestor taking a 27% stake and Pon Holdings having
7%. Commenting on the offer, the head of VW financial services
Christian Dahlheim said, "With a takeover premium of 30-40 percent,
depending on the reference point, we have presented a very
attractive offer." The consortium is offering EUR0.50 a share,
which could add EUR0.01 if 90% of shareholders agree to take up the
offer. (IHS Markit AutoIntelligence's Tim Urquhart)
Tesla has opted to not take up potential state aid from the
German government to the tune of EUR1.14 billion (USD1.3 billion)
as it has decided to first build a new battery cell at its Texan
plant, according to a Bloomberg report. The new 4680 battery cell
offers greater energy density and manufacturing benefits. Tesla has
already proved the cell design in a pilot assembly line, and is
keen to begin serial manufacturing of the cell type for production
cars. An unnamed source said that if Tesla manufactured the new
cell type at the battery plant it is building in Germany it would
have been eligible for the grant money through the European Union's
Important Project of Common European Interest (IPCEI) initiative,
with the German government able to allocate its tranche of the
funding to battery electric vehicle (BEV) cell production and
research and development (R&D). (IHS Markit AutoIntelligence's
Tim Urquhart)
BMW Group has expanded its eDrive zones in another 20 European
cities, bringing the total to 138 cities, according to a company
statement. BMW eDrive zones automatically switches its plug-in
hybrid electric vehicles (PHEVs) into purely electric driving mode
as soon as it enters an area that the system recognizes such as a
low-emission zone. BMW has also introduced a loyalty program that
will reward drivers of BMW PHEVs via a points system. The incentive
scheme will offer points for every purely electric kilometer driven
and twice the points for every km with an eDrive zone. This will
give participants access to rewards such as free charging on BMW's
charging system. BMW expects to roll out the service in at least
another 30 cities worldwide in the coming year. (IHS Markit
Automotive Mobility's Surabhi Rajpal)
In 2020, retail sales of fresh mushroom in Germany rose by 17%
y/y with an estimated per capita consumption of 2.13 kg. The trend
continued in in the first nine months of 2021 with a 3% y/y
increase in volumes, data from the Agricultural Market Information
(AMI) reveals. (IHS Markit Food and Agricultural Commodities'
Cristina Nanni)
In 2020, 66.8% of private households purchased mushrooms at
least on one occasion, which is a 1.4 percentage points increase
compared with the previous year. In the January-August 2021 period,
about 64% of the German households purchased mushrooms against
62.7% in the same period of the previous year. Consumption of fresh
organic mushrooms rose by 48% in 2020 while annual growth between
2015 and 2019 has never exceeded 36%.
Compared with all other vegetable purchasers, the group of
buyers for mushrooms is younger: families with children, couples
without children and single households.
The pandemic also brought processed mushrooms back to growth in
2020 after a long-term decline. Canned mushroom per capita
consumption rose by 11% y/y to 1.49 kg and that of frozen were up
by 23% to 70 g. Data about processed mushroom sales will be
released between February and March 2022.
Mushroom production in Germany amounted to 85,100 tons in 2020
against 78,900 tons in 2019, mainly champignon (95%). About 12,150
tons of harvested mushrooms were organic. Production costs rose due
to the implementation of COVID-related health and safety measures,
energy and fuel rising costs.
With the increase in production, imports were pushed back
slightly. In 2020, Germany imported around 92,000 tons of fresh
mushrooms against 94,000 tons in 2019. Its main suppliers are
Poland and the Netherlands, the two largest mushroom producers in
the EU. Canned mushroom imports were 1% above those of 2019 and
around 57,000 tons, while dried imports declined by 13% y/y to
1,735 tons. Frozen mushrooms intakes dropped by 8.5% to 25,800
tons.
Bladt Industries has received contract from Vattenfall to
manufacture and deliver transition pieces for Vesterhav Nord and
Vesterhav Syd offshore wind farms. In total the company will
manufacture 41 transition pieces for the Vesterhav project that is
21 units for Vesterhav Nord and 20 units for Vesterhav Syd with
each TP having height of 22.5 meters and weight approximately 260
tons. These TP's will be manufactured at Bladt Industries'
facilities in Aalborg, Denmark. The fabrication is planned to start
in the spring of 2022, with delivery planned for early 2023. (IHS
Markit Upstream Costs and Technology's Monish Thakkar)
The Vesterhav Syd and Nord offshore wind farms will consist of
41 Siemens Gamesa 8.4 MW wind turbines with a total capacity of
344.4 MW and will be in the water dept of approximately 20
meters.
Due initiation of new EIA processes by the Danish Energy
Agency, Vattenfall had to delay the projects which were initially
planned to commission in 2020. After which the company changed the
layout of the wind farms, pushing the turbines as far offshore as
possible. Hence, the commissioning of the two wind farms is now
expected by the end of 2023.
Floating Power Plant (FPP), will be testing its hybrid floating
offshore wind and wave power generating platform with the Oceanic
Platform of the Canary Islands (PLOCAN). The platform will be
deployed north of the PLOCAN test site and will be grid connected
via a new subsea cable. According to the Danish-based FPP, the
platform will be able to generate over 5MW of combined power from
the wind turbine and wave energy converters. FPP ws founded in 2007
and is targeting the deep water small to large wave regions. Its
platform can be fitted with wave absorbers to increase overall
power production and consistency in power generation. The company
has stated that its platform can be altered to accommodate 4-15 MW
of wind turbine capacity, and 2-3.6 MW of wave power. (IHS Markit
Upstream Costs and Technology's Melvin Leong)
Asia-Pacific
Major APAC equity indices closed mixed; India +0.3%, Mainland
China flat, Australia -0.5%, South Korea -0.9%, Hong Kong -1.0%,
and Japan -1.6%.
Mainland China's industrial profits expanded by 42.2% year on
year (y/y) through October, lower by 2.5 percentage points from the
first three quarters. On a two-year (2020-21) average basis,
industrial profits increased by 19.7% y/y in the first 10 months,
up by 0.9 percentage point from the month-ago reading. For October
alone, industrial profits recorded growth of 24.6% y/y,
accelerating from 16.3% y/y in September, according to the National
Bureau of Statistics (NBS). (IHS Markit Economist Lei Yi)
The cumulative profitability ratio came in at 7.01% by the end
of October, ending the three-month consecutive decline over the
third quarter. While the profitability ratio of the upstream mining
sector posted larger increases - rising by 1.07 percentage points
to 19.32% in October - that of manufacturing and utility sectors
also recorded smaller declines than previous months, edging down by
0.01 percentage point and 0.17 percentage point to reach 6.57% and
4.92%, respectively.
By sector, industrial profit strength held up for mining and
raw material manufacturing in October, owing to eased production
curbs and elevated raw material prices. With the authorities
ramping up coal production to ensure power supply, industrial
profits of coal-related sector surged by 438% y/y in October, up by
69.6 percentage points from the September reading. Thanks to rising
demand driven by the "double 11" shopping season along with
increasing inflation pass-through, industrial profit growth of
consumer goods manufacturing recorded a rise of 3.6% y/y in October
compared with a year-on-year decline in September. The high-tech
manufacturing sector continued to report double-digit profit
growth, 17.4% y/y in October, led by vaccine and computer
products.
Xiaomi Corp is to build an electric vehicle (EV) manufacturing
plant in Beijing. Xiaomi signed an agreement with Beijing
Economic-Technological Development Area on 27 November to locate
its new plant in the development zone in the Chinese capital,
reports the China Securities Journal. The plant is to be built in
two phases, each of which is to have an annual production capacity
of 150,000 vehicles. The new plant marks an important step in
Xiaomi's plan to introduce its own model in the market by 2024.
This agreement also settles speculation over whether the smartphone
maker would enter into manufacturing deals with established
automakers such as Great Wall and Geely Auto to launch vehicle
production. There are still lots of unknown elements in Xiaomi's
expansion plan into the auto sector, such as its product plan,
pricing strategy, and target customers. Xiaomi has recently
announced several investments in startup auto suppliers in an
attempt to secure supplies of key components and facilitate the
research and development of its new model. Hesai Technology, a
Chinese Lidar supplier, announced on 16 November that it has
received an investment of USD70 million from Xiaomi in its D round
of fundraising. Apart from its investment in Hesai, Xiaomi has
acquired Deepmotion Tech, a company specializing in autonomous
driving technology development, for USD7,737 million. These
investments indicate Xiaomi's new models are to feature high-level
automated driving technologies, which are the core competency of a
smart EV company, according to CEO Lei Jun. (IHS Markit
AutoIntelligence's Abby Chun Tu)
China is seeking to kickstart its hydrogen economy by
subsidizing fuel-cell vehicles and their infrastructure in three
major city clusters. But industry experts said Beijing has to
refine policy instruments and stimulate more investment to put the
country on a sustainable decarbonization pathway. (IHS Markit
Net-Zero Business Daily's Max Lin)
To reach an official target of carbon neutrality by 2060, the
world's largest GHG-emitting nation has been aiming to replace
fossil fuels with hydrogen in parts of its economy.
In September 2020, Chinese policymakers said they would provide
subsidies for the value chains of automobiles powered by hydrogen
fuel cells around eligible city clusters. Three metropolitan areas
were selected earlier this year: Beijing, Shanghai, and
Guangdong.
Each of them can receive up to ¥1.5 billion ($235 million) for
fuel-cell vehicles and ¥200 million for hydrogen supply during a
four-year demonstration period. Shanghai unveiled a detailed grant
scheme in early November, while others are expected to follow suit
soon.
Observers believe the scheme is targeting fuel-cell heavy
trucks with a gross vehicle weight of 31 metric tons (mt) or more.
Battery-driven electrical passenger cars and light trucks already
enjoy high market penetration because their charging network is
well under development.
While the steelmaking, cement, aluminum, and petrochemical
sectors can all make great progress in decarbonization by replacing
fossil fuels use with clean hydrogen, trucks provide another entry
into this fledgling market. Fuel-cell trucks are already in the
market, and the infrastructure costs for refueling them are
relatively low compared with other hard-to-abate sectors.
Several polyester producers in China announced production rate
cuts of 20%, in order to preserve margins, according to Chinese
analysts and traders on Monday. Polyester producers said in a joint
statement that they ran sales promotions at loss-making levels last
week, which eroded their profits from the first half of this year.
In order to remain profitable for 2021, polyethylene terephthalate
(PET) producers in Xiaoshan, Zhejiang province, spearheaded by the
chemical fibers sector, will cut operating rates to preserve
margins. Four-to-five producers will participate, involving 23
million mt of capacity, industry participants reported. (IHS Markit
Chemical Market Advisory Service's Chuan Ong)
These plants decided late-week to reduce production by around
20%, with details to follow, according to industry
participants.
"Polyester producers have been lowering their prices in order
to promote sales early last week. Inventory might be high at the
moment. Margins are fine, if we disregard the high inventory," said
an analyst.
According to a trader, it is doubtful if polyester producers
will carry through on their threat. "They are not making losses,
although the inventory is high. Their customers are just not buying
feedstock. So, it's only when polyester producers run promotions,
do they see some turnover," said the trader. End-users of polyester
in the textiles sector are not under pressure, as inventory levels
are normal and margins are fine, said the trader.
"The main issue is that their sales have been weak," added the
trader.
A broker said that polyester producers Hengli, Tongkun,
Xinfengming and Tiansheng have not announced timelines for
operating rate cuts yet.
Production cuts in polyester will reverberate upstream to
paraxylene, which hit a 24-week low last Friday to close at $864/mt
CFR. Despite rising crude prices, PX gains have been capped by
dwindling margins against PTA.
Japan's Cabinet Office has approved a larger-than-expected
economic package intended to counter the effect of the resurgence
of coronavirus disease 2019 (COVID-19), stimulate a recovery, and
generate economic growth and wealth redistribution. However, the
fiscal expenditure is unlikely to contribute to immediate real GDP
growth to the extent that the government expects, and it will
probably delay fiscal consolidation. (IHS Markit Economist Harumi
Taguchi)
The Cabinet Office approved a JPY78.9-trillion (USD696 billion)
economic package on 19 November 2021 and the supplementary budget
for fiscal year (FY) 2021/22 (ending March 2022) on 26 November
2021. The planned measures total JPY55.7 trillion, equivalent to
about 10% of GDP, which is the largest-ever fiscal spending plan
for a single economic package. While additional funding required
for the national government is JPY43.7 trillion, the government
aims to pass a JPY31.9-trillion supplementary budget bill during an
extraordinary parliamentary session by the end of 2021.
JPY11.8-trillion worth of measures will be included in the initial
FY 2022/23 budget.
The economic package was primarily designed to address
persistent concerns about the medical system in case of the
resurgence of COVID-19 and mitigate the prolonged effects of the
pandemic on businesses and individuals. Measures include purchases
of COVID-19 vaccine booster shots and medicines. Along with funds
for extended support for medium and small enterprises and the
self-employed, the package includes up to JPY2.5 million in
financial aid for businesses suffering from lower revenues because
of the pandemic.
For individual support, the package includes JPY100,000 in cash
and coupon handouts for children aged under 18 and aid for
low-income households and students facing financial difficulties.
The government also plans to implement measures to mitigate the
negative effects of higher energy prices, including subsidies to
oil wholesalers if domestic gasoline prices surpass certain levels
in order to prevent an excessive rise in retail gasoline
prices.
Japan's retail sales increased by 1.1% month on month (m/m) in
October following a 2.8% m/m rise in September. The year-on-year
(y/y) figure also rose by 0.9% after two consecutive months of
declines. The continued m/m improvement largely reflected the
gradual easing of COVID-19 containment measures and a faster rise
in fuel prices. (IHS Markit Economist Harumi
Taguchi)
The major contributors to the improvement were a faster rise in
sales of fuel and continued increases in sales of apparel and
accessories, machinery and equipment, general merchandise, and food
and beverages. While the resumption of business activity and cooler
temperatures helped lift sales of fuel, higher prices for gasoline
and kerosene also contributed to the increase. Those improvements
were partially offset by a continued decline for auto sales because
of difficulties in delivering new cars prompted by shortages of
semiconductors and parts.
The October results were better than IHS Markit anticipated,
but retail sales are still below the April level (following the
easing of containment measures to counter the fourth wave of
COVID-19 infections). The October 2021 level was above the
pre-pandemic December 2019 level, but still below the level before
the disruption caused by the October 2019 consumption tax
increase.
Samsung Electronics has announced plans to construct a
semiconductor manufacturing facility in Taylor, Texas (United
States). According to a company press release, the estimated
USD17-billion investment in the US will aid in the production of
advanced logic semiconductor solutions that power next-generation
innovations and technologies. Samsung Electronics Device Solutions
Division vice-chairman and CEO Kinam Kim said, "As we add a new
facility in Taylor, Samsung is laying the groundwork for another
important chapter in our future." The executive added, "With
greater manufacturing capacity, we will be able to better serve the
needs of our customers and contribute to the stability of the
global semiconductor supply chain." The new facility is to produce
products based on advanced process technologies for use in mobile,
5G, high-performance computing (HPC), and artificial intelligence
(AI). Samsung says it remains committed to assisting customers
around the world by making advanced semiconductor fabrication more
accessible and meeting rising demand for cutting-edge products.
(IHS Markit AutoIntelligence's Jamal Amir)
The Seoul metropolitan government said that three autonomous
cars will start operating for the public this week in Sangam-dong
district in South Korea, reports Yonhap News Agency. The cars will
transport passengers between DMC Station and nearby apartment
complexes and office areas. Initially, the service will run on an
advance reservation system until 4 December, and then users can
book them using an app called 'TAP!'. By the end of December, three
additional autonomous vehicles (AVs), including an autonomous bus,
will be deployed on the same route in Sangam-dong. The city
government plans to test the free service for a month, and users
will be required to pay for the service starting from January 2022.
It suggested a fee of KRW1,200 (USD1.0) for the autonomous bus
service and around KRW3,000 (USD2.5) for the autonomous car
service, while private operators may charge considerably less.
Seoul eventually plans to operate more than 50 AVs in Sangam's
pilot zone by 2026. (IHS Markit Automotive Mobility's Surabhi
Rajpal)
HHI plans to establish technical guidance for offshore green
hydrogen plants. Together with Korea Shipbuilding & Offshore
Engineering (KSOE), a preliminary deal has been signed with
American Bureau of Shipping (ABS). Aim of the deal is to establish
guideline and safety regulations for the design of offshore green
hydrogen plants. HHI aims to obtain approval for the guideline from
ABS by the first half of 2022. Earlier in May 2021, HHI struck a
deal with nine other entities, including state-run Korea National
Oil Corp., to build a green hydrogen plant in the East Sea by 2025.
(IHS Markit Upstream Costs and Technology's Jessica
Goh)
ABS has approved Sembcorp Marine's 3D printed parts after
successful onboard testing on an oil tanker. The 3D printed
(additive manufactured) parts were installed on an oil tanker,
Polar Endeavour, six months ago and put in operation. The parts
were retrieved, inspected and remotely surveyed after six months of
operation. The parts were validated to be in good working
condition. The 3D printed parts were the gear set and gear shaft
for boiler fuel supply pump, flexible coupling for marine
sanitation devices pump, and an ejector nozzle for fresh water
generator. (IHS Markit Upstream Costs and Technology's Jessica
Goh)
Tata Group plans to set up its own semiconductor assembly unit
in India with an investment of USD300 million, reports Autocar
India citing Reuters as the source. The group is reportedly in
talks with three states - Tamil Nadu, Karnataka, and Telangana -
and is scouting for land for setting up the outsourced
semiconductor assembly and test (OSAT) plant. An OSAT plant sources
silicon wafers from semiconductor foundries, packages, assembles
and tests them, finally turning them into finished semiconductor
chips. Tata Group has already looked at some potential locations
for the plant and the venue is likely to be finalized by next
month, highlights the report. (IHS Markit AutoIntelligence's Jamal
Amir)
Posted 29 November 2021 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
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