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US equity markets closed higher with the S&P 500 and Nasdaq
reaching new record high closes, while APAC and European markets
were mixed. The US dollar and benchmark US/European government
bonds closed higher on the day. Investment grade credit indices
were flat across iTraxx and CDX-NA, while Xover closed tighter and
CDX-NAHY wider. Gold and Brent crude closed higher, while WTI,
silver, and copper all closed lower.
Americas
US equity markets closed higher, and the S&P 500 and Nasdaq
closed at a new record high; Russell 2000 +1.4%, Nasdaq +0.5%, DJIA
+0.4%, and S&P 500 +0.3%.
10yr US govt bonds closed -1bp/0.92% yield and 30yr bonds
-2bps/1.66% yield.
CDX-NAIG closed flat/51bps and CDX-NAHY +4bps/292bps.
DXY US dollar index closed +0.2%/90.96.
Gold closed +0.5%/$1,875 per ounce, silver -0.2%/$24.74 per
ounce, and copper -0.6%/$3.50 per pound.
Crude oil closed -0.3%/$45.60 per barrel.
Amid disruptions stemming from COVID-19, US productivity
(output per hour) and compensation per hour in the nonfarm business
sector each rose sharply during the second quarter, but they
diverged in the third quarter. (IHS Markit Economist Ken Matheny
and Lawrence Nelson)
Productivity rose at a 4.6% annual rate in the third quarter,
revised down 0.3 percentage point and following an unrevised 10.6%
increase in the second quarter. Hours worked rose 37.1% in the
third quarter, revised up 0.3 percentage point, following a 42.9%
decline in the second quarter.
Compensation per hour declined at a 2.3% rate in the third
quarter after rising 24.3% in the second. The third-quarter change
was revised up 2.1 percentage points, while the second-quarter
change was revised up 4.3 percentage points.
Productivity rose by less than we expected in the third quarter
while compensation per hour declined by more than expected. Unit
labor costs declined at a 6.6% pace in the third quarter, nearly
matching our expectation.
Data on productivity and costs have been severely impacted by
fallout from the COVID-19 pandemic, so the implications of recent
quarterly data for longer-run trends are unclear. Output and hours
worked each fell sharply in the second quarter following smaller
declines in the first quarter. Both rebounded sharply in the third
quarter. However, over the first two quarters of 2020, hours fell
further than output and hours rebounded by less than output in the
third quarter, resulting in a higher path for productivity. On
balance over the first three quarters of the year, compensation per
hour rose by even more than productivity, as employment in
lower-wage sectors was more severely impacted than employment in
higher-wage sectors. Unit labor costs rose at a 4.8% annual rate
over the first three quarters of 2020.
As COVID-19-related distortions begin to reverse, we expect
productivity to reverse a portion of its recent surge, while
compensation per hour will rise much more slowly, on average,
resulting in a dip in unit labor costs followed by modest
increases.
US job postings during the week ending 27 November improved
somewhat, according to the Opportunity Insights Economic Tracker.
Still, at 17% below the January average, job postings remained
weak, indicative of slow recovery in labor markets. Meanwhile, the
Weekly Economic Index (WEI), from researchers affiliated with the
New York Fed, stood at -2.1 last week, a reading that, when
combined with readings from earlier in the fourth quarter, points
to roughly a 2.8% decline in real GDP over the four quarters of
2020. This is more of a decline than we currently forecast (we look
for a 2.2% decline) but is nevertheless consistent with our
forecast, given the statistical uncertainty of the WEI. (IHS Markit
Economists Ben Herzon and Joel Prakken)
A vaccine from the University of Oxford and AstraZeneca Plc
shows only a limited ability to stop transmission of the
coronavirus despite preventing Covid-19 illness in a majority of
those who are infected. Oxford and Astra are the first vaccine
developers to unveil data on asymptomatic infection rates in people
who received their shot. Overall, it reduced such transmissions by
27% in a large study, according to peer-reviewed results published
in the Lancet medical journal on Tuesday. Researchers tested more
than 6,000 study participants in the U.K. for Covid-19 infections
on a weekly basis and found 29 asymptomatic infections in the
vaccinated group. That compared with 40 cases in the control group,
which was roughly the same size. (Bloomberg)
Ford and partner Argo AI have announced a short-term pilot
program of food deliveries using autonomous vehicles (AVs) in the
Miami area of Florida, United States, in conjunction with a local
non-profit organization. The non-profit organization is called The
Education Fund and the pilot program is scheduled to run for eight
weeks. Under the program, Ford and Argo AI will use Ford Fusion
Hybrid self-driving test vehicles to deliver fresh bags of produce
from the schools where the produce is grown to about 50 students
and their families. In a blog post, Navin Kumar, Ford AV LLC's
director of AV business, describes the program, saying the vehicles
will be loaded with the food when they arrive at the schools and
then continue on a daily delivery route. There will be two Argo AI
specialists in each vehicle to monitor the test vehicle and, at the
drop-off location, one of the Argo AI specialists will make a
contactless delivery. Kumar says that the success of this program
is leading Ford to plan to expand it and introduce similar pilots
in 2021, although the company has given no further details. Ford
has delayed plans to launch a self-driving vehicle service until
2022, largely on the COVID-19 pandemic as well as technology
development, but its work has not abated. Ford has been testing
goods-delivery services in Miami, Austin (Texas), and Washington
DC, with the company believing that, in future, goods deliveries
will be a key AV service. (IHS Markit AutoIntelligence's Stephanie
Brinley)
Aurora has announced a deal to acquire Uber's Advanced
Technologies Group (ATG), which will value the combined entity at
USD10 billion. Uber will also invest USD400 million in Aurora as
part of a strategic partnership. Closure of the deal is due in the
first quarter of 2021 and it will see Uber CEO Dara Khosrowshahi
take a seat on Aurora's board. Uber is refocusing on its core
businesses, including ride-hailing and food delivery, since the
COVID-19 virus pandemic, and scaling back some future technology
projects. The sale of ATG will support Uber's aim to achieve
profitability on an adjusted basis by the end of 2021. Although
autonomous vehicles continue to show promise, with investment and
development not letting up, their deployment commercially and at
scale remains several years away. (IHS Markit Automotive Mobility's
Stephanie Brinley and Surabhi Rajpal)
The premier of Canada's Ontario province is quoted as saying
there is no consideration of reviving a previous electric vehicle
(EV) incentive program, which had been cancelled in September 2018.
Automotive News quotes a spokesperson for the premier, Doug Ford,
as saying, "We will continue to put forward sensible solutions that
encourages all Ontarians to take meaningful action to protect and
preserve our environment while making sure that taxpayers' money
isn't being used to help those who don't need it." This comes after
the province committed CAD295 million to supporting Ford's
transition of its Oakville assembly plant from traditional ICE
engines to EVs. Although the Canadian federal government is pushing
for 10% of Canada's annual sales to be EVs in 2025, the country's
transport agency, Transport Canada, recently said that its current
trajectory would put EV sales in Canada at only 5-6% of the market
at that point. Although Canada's Liberal party pushes for more
incentives as a method for increasing demand and reaching national
and provincial targets, the Conservative party takes the view that
incentives are essentially subsidizing purchases for those who
could afford expensive vehicles at full price, and do not increase
actual demand. However, the Automotive News report also notes that
as EV subsidies were pulled back in Ontario and British Columbia,
EV sales immediately slumped. The question of government-supported
incentives as a tool for helping to develop sustainable demand is
ongoing in many markets. (IHS Markit AutoIntelligence's Stephanie
Brinley)
Light-vehicle (LV) registrations in Brazil decreased 7.4% year
on year (y/y) in November, according to data from the National
Association of Motor Vehicle Manufacturers (Associação Nacional dos
Fabricantes de Veículos Automotores: Anfavea). Brazil's LV exports
increased 41.5 y/y in November, while LV production increased 3.9%
y/y. Brazilian LV sales topped 2.66 million units in 2019, roughly
8% higher than in 2018. Brazil's LV sales were driven by increased
availability of credit, and the sales increased last year despite a
somewhat sluggish economy, which grew at 1.1% in 2019. However,
Brazil's real GDP is expected to drop by 5.9% in 2020, and we
expect a sharp drop in LV sales in Brazil to less than 1.9 million
units this year, owing to the impact of the COVID-19 virus
pandemic. Along with announcing last month's results, Luiz Carlos
Moraes, president of Anfavea, said, "We still don't know if we are
dealing with impounded sales in the months when people were unable
to buy or if this demand is here to stay. There are also at least
three factors that put recovery at risk: increased costs and
prices, production stops due to a lack of inputs and because of
Covid itself, which is growing again." He added, "The fall in
production at the height of the pandemic was very strong and it
will take some time to fix this disorganization caused in the
sector's production chain. The lack of components and inputs is
likely to continue for the first quarter of 2021, before we return
to normality." The outlook for the Brazilian LV market is gloomy as
the spread of the COVID-19 virus is likely to affect sales in
December, followed by a weak recovery phase until 2025. Brazil's LV
sales were 2.66 million units in 2019 and are forecasted to
decrease 28.3% to 1.91 million units in 2020. Brazil's LV exports
witnessed a massive increase due to increased demand from countries
such as Argentina, Chile, Colombia, and Mexico, because of a need
to replenish their low stocks. IHS Markit forecasts Brazil's LV
production will reach 3 million units in 2024. (IHS Markit
AutoIntelligence's Tarun Thakur)
Europe/Middle East/Africa
European equity markets closed mixed; Spain -0.6%, Italy/France
-0.2%, and Germany/UK +0.1%.
10yr European govt bonds closed higher across the region;
Germany/France -3bps and Italy/Spain/UK -2bps.
iTraxx-Europe closed flat/47bps and iTraxx-Xover
-3bps/241bps.
Brent crude closed +0.1%/$48.84 per barrel.
Failed EU-UK trade negotiations would subject UK companies to
new tariffs when trading with the European Union, threaten their
supply chains, and make their products and services more expensive
at a time when the United Kingdom is facing further acute GDP
losses in late 2020. (IHS Markit Economist Raj Badiani)
The EU and the UK are still struggling to conclude a Free Trade
Agreement (FTA), which would be in place after the UK leaves the EU
Customs Union and single market on 31 December 2020, the end of the
transition period.
The negotiating obstacle remains the conflicting
interpretations of the guiding principles of the trade talks
spelled out in the Political Declaration that accompanied the
Withdrawal Agreement signed on 24 January 2020. It states that both
sides are committed to a "comprehensive and balanced Free Trade
Agreement" with "zero tariffs, fees, charges or quantitative
restrictions". However, it also pledges that the parties will
"retain their autonomy and the ability to regulate economic
activity according to the levels of protection each deems
appropriate in order to achieve legitimate public policy
objectives" .
The two sides remain at loggerheads on two key issues, both
based on the UK insisting it is entitled to full sovereignty in any
future trade deal
The EU insists that it will only allow the UK "zero tariff,
zero quota" access to the EU single market if the UK commits
legally to a set of "level playing field" principles that minimize
the risk that it will undercut the EU on environmental regulation,
workers' rights, and state aid to businesses. The two sides also
disagree on how any future trading or regulatory disputes should be
resolved.
On fishing, the EU argues that UK fishermen will only have
special access to EU markets to sell their catch if EU trawlers can
access UK territorial waters. However, the UK's position remains
steadfast, arguing that its coastal waters should be under its
complete control as a sovereign nation.
UK Prime Minister Boris Johnson continues to insist that any
trade agreement with the EU has to respect the country's
sovereignty and its freedom to secure FTAs with the rest of the
world. Johnson has advocated a Canada-style FTA with the EU whereby
the UK leaves its Customs Union and single market and attains
regulatory autonomy, implying a relatively hard Brexit.
However, European Commission President Ursula von der Leyen has
warned, "Without a level playing field on environment, labor,
taxation and state aid, you cannot have the highest quality access
to the world's largest single market." The EU will expect the UK to
adhere to stricter rules than those underpinning recent EU trade
agreements with China or Japan to reflect the UK's "geographical
proximity".
The probability that the EU and the UK will fail to reach a
trade agreement is more elevated after the latest round of intense
talks failed to produce a breakthrough. The narrative from both
sides remains that "significant differences" exist between
them.
However, there are some hopeful developments:
Johnson has raised hopes of the prospect of a last-minute
breakthrough by agreeing to meet von der Leyen in Brussels in the
coming days. He hopes the "power of sweet reason" will allow the UK
and the EU to reach a post-Brexit trade deal this week. Some
political observers note that Johnson returned with the Withdrawal
Agreement when he last visited Brussels.
Also, Johnson's 86-seat majority in the UK parliament will
limit the influence of the ruling party's more extreme Brexiters
and give Johnson some wriggle room when meeting the Commission's
president. In addition, the main opposition party in parliament is
likely to vote for any trade deal out of the national
interest.
Both Johnson and von der Leyen have asked the chief negotiators
and their teams to prepare "an overview of the remaining
differences to be discussed in a physical meeting in Brussels in
the coming days".
Before the meeting takes place, the UK government has agreed to
remove parts of the Internal Market Bill (see above) that would
have seen the UK break international law, after reaching an
"agreement in principle" on Brexit divorce issues.
The rising number of COVID-19 cases in the UK and the rest of
Europe will focus the minds of the two negotiating parties to reach
an agreement, and to accept collective responsibility to avoid a
further economic shock for the region that would arise from failed
EU-UK trade negotiations.
A new electric vehicle (EV) charging forecourt has opened in
Braintree (UK). In a statement GRIDSERVE, which has built the site
just off the A131 road, has said that it can charge 36 EVs
simultaneously via chargers that can deliver up to 350kW of power.
It has highlighted that the electricity to charge vehicles is
generated from solar panels on canopies above the chargers as well
as a from a solar farm in Clay Hill (UK) which delivers the
electricity through the National Grid. It also has a 6 MWh battery
onsite in order to stabilize the local energy grid. The location
also has a range of facilities for customer needs, including a
comprehensive retail space that includes a coffee shop and post
office, a waiting lounge with wireless internet, children's area,
wellbeing area, business meeting rooms and washrooms. Separately,
the Department for Transport has announced that green numberplates
are to come into circulation for battery electric vehicles (BEVs)
from today (8 December). According to a statement, "It will raise
awareness of the growing number of zero-emission vehicles, as well
as helping motorists benefit from local initiatives such as cheaper
parking and cost-free entry into zero-emission zones." The new
numberplates have a green flash on the left-hand side of the plate
and can be combined with the Union flag and national identifiers
permitted by existing regulations. Owners will be able to retrofit
the plates to existing cars, vans, buses, medium and heavy
commercial vehicles, taxis, and motorcycles, as long as they emit
no tailpipe CO2 emissions. (IHS Markit AutoIntelligence's Ian
Fletcher)
A new collaboration involving farmers, processors and retailers
has been launched to drive standards and sustainability in the
British beef supply chain. The UK Cattle Sustainability Platform
(UKCSP) brings together more than 26 organizations, including the
National Farmers' Union (NFU), the British Meat Processors'
Association (BMPA), Sainsburys, Tesco and McDonald's. The platform
has already been formally recognized by the European Roundtable for
Beef Sustainability (ERBS) and is linked to other international
bodies such as the Global Roundtable for Sustainable Beef (GRSB).
The UK platform will follow the ERBS framework by focusing on four
target areas; the environment, animal medicines, animal health and
welfare and farm management. Specific outcome targets include an
intensity reduction of 15% in greenhouse gas emissions by 2025, and
a 50% reduction in the use of 'last resort' antibiotics (HP-CIAs)
by 2023. On the health and welfare side, it aims to ensure all
animals have access to loose housing (when housed) by 2030 and that
pain relief is always given for procedures such as castration and
dehorning. The UK platform has agreed to go beyond ERBS targets in
two areas: a net zero ambition for the UK and to adopt targets
announced by Responsible Use of Medicines in Agriculture (RUMA)
Alliance in November 2020. (IHS Markit Food and Agricultural
Commodities' Max Green)
Based on Eurostat's third estimate, eurozone GDP rebounded at a
record 12.5% q/q pace in the third quarter of 2020, marginally down
on the initial 12.7% estimate (which was well above market
expectations). (IHS Markit Economist Ken Wattret)
On a y/y basis, eurozone GDP fell by 4.3% in the third quarter
of 2020, unrevised from the prior estimate and an improvement of
over 10 percentage points compared to the second quarter's rate of
contraction (-14.7%).
Despite the third quarter's record q/q increase, eurozone GDP
remained over 4% below its pre-pandemic level in the fourth quarter
of 2019, reflecting the exceptionally large declines over the first
half of the year.
As expected, the largest contribution to the third quarter's
q/q rebound came from private consumption. It rose by 14% q/q,
again a record rise by a huge margin, contributing over seven
percentage points to the q/q growth rate in GDP. Despite the
rebound, however, private consumption remained almost 5% below its
fourth-quarter 2019 level.
Similar patterns were evident across other categories of
expenditure. Investment and exports rose by over 13% and 17% q/q,
respectively, with the former contributing almost three percentage
points to q/q GDP growth. Still, despite their vigorous rebounds in
the third quarter, they remained around 10% and 9% down on their
fourth-quarter 2019 levels, respectively.
With imports rebounding less markedly in the third quarter
(12.3% q/q), net trade contributed two and a half percentage points
to the third quarter's q/q GDP growth rate, while inventories
subtracted around half as much (again see first chart below).
Across the eurozone's member states, net GDP losses since the
fourth quarter of 2019 have shown considerable divergence (see
second chart below) and we expect more of the same in the fourth
quarter. This reflects variations in a range of factors including
COVID-19 containment measures, economic structure and policy
support.
Looking at the largest 11 member states, the biggest net
decline in GDP over the three quarters of 2020 was in Greece
(-12.1%). While its contraction over the first half of 2020 was not
as deep as in many other member states, its rebound in the third
quarter was relatively modest .
In contrast, some other member states, including France,
experienced comparatively large declines in GDP over the first half
of the year but improved their relative performance via strong GDP
rebounds in the third quarter (see second chart below).
The best performer over the first three quarters of 2021 was
Ireland, with GDP in the third quarter actually up by 3.7% on its
pre-pandemic level in the fourth quarter of 2019.
In line with the tightening of COVID-19-related restrictions
evident in our containment indices, plus November's plunge in the
composite PMI, we continue to forecast another sizeable q/q
contraction in eurozone GDP in the fourth quarter of 2020; of -2.4%
in November's baseline forecast.
While "hard" activity data for the fourth quarter of 2020 is
limited at this point, the figures currently available suggest the
risk to our estimate is tilted towards a somewhat smaller decline.
A key reason for this is the recent strength in the manufacturing
sector.
The European Commission says it has approved, under EU merger
regulation, the proposed acquisition of BASF's worldwide pigments
business, BASF Colors & Effects, by DIC Corp. (Tokyo, Japan).
To address the Commission's competition concerns, DIC offered to
divest a pigment manufacturing facility operated by its wholly
owned subsidiary Sun Chemical at Bushy Park, South Carolina. The
approval is conditional on full compliance with a commitments
package offered by DIC, including the Bushy Park divestment, the
Commission says. (IHS Markit Chemical Advisory)
The Commission says it had concerns that the proposed
transaction, as originally notified, would have reduced competition
on the market for the supply of perylene and quinacridone pigments.
DIC's commitment to divest the Bushy Park facility, which
manufactures a large majority of the company's perylene and
quinacridone pigments, removes almost entirely the overlap between
DIC's and BASF's activities in the relevant pigments, the
Commission says.
The commitments ensure that the same number of suppliers will
remain active on these markets and that customers retain the same
level of choice, the Commission says. DIC's divestment commitment
includes the full transfer of the Bushy Park plant, including
technology, brands, manufacturing equipment, and other intangible
assets, to a manufacturer with proven expertise in pigment
production, according to the Commission.
BASF Colors & Effects and DIC are market leaders in the
production and sale of pigments and other colorants, and the two
main suppliers of perylenes and quinacridone pigments worldwide,
the Commission says. DIC is mainly active in pigments and colorants
through Sun Chemical, the Commission says.
France's trade deficit narrowed in October, according to
seasonally adjusted figures released by the Customs Office. The
shortfall declined from EUR5.587 billion (USD6.772 billion) in
September to EUR4.845 billion. (IHS Markit Economist Diego Iscaro)
Collapsing export had driven a substantial deterioration in the
trade balance, with the deficit reaching its maximum in at least 20
years in June. The deficit has narrowed for a fourth consecutive
month in October, and stood only slightly above its 2019
average.
Exports continued to recover in October, rising by 3.3% month
on month (m/m). Exports had increased by 5.4% m/m in September, and
now stand 7.6% below their pre-pandemic level.
Exports of transport materials, which account for around 20% of
total merchandise exports, were particularly strong in October
(+11% m/m), although they remain almost 10% below their
pre-pandemic level in February. Exports of electrical machinery,
which account for a similar percentage of exports, rose at 3.3%
m/m.
The geographical breakdown shows sales to Italy (+5.8% m/m),
Switzerland (+5.4% m/m) and Poland (+4.4% m/m) rising by above
average in October. On the other hand, exports to Belgium, which
had risen by 14.1% m/m in September, declined by 8.1% m/m in
October. Exports to Asia increased by 3.7% m/m, following a rise of
11.2% m/m in September.
Meanwhile, merchandise imports increased by just 1.2% m/m in
October. Imports now stand 6.7% below February's level.
The light-vehicle (LV) market in Russia rose 5.9% year on year
(y/y) to 157,580 units, according to a release by the Association
of European Businesses (AEB). This result followed on from the
strong 7.0% y/y rise in October. The improvement in the last two
months helped the year-to-date (YTD) decline moderate slightly, to
a fall of 10.3% y/y to 1,346,351 units. This decline in the first
11 months of the year is much smaller than in many markets in
Western Europe, despite the Russian market being subject to the
same COVID-19 virus pandemic-related lockdown conditions that
affected vehicle production in the country, led to the temporary
closure of dealerships and hit consumer confidence hard. However,
this is more evidence of the low base that the Russian market has
been operating on over the last few years. There was evidence that
strong offers and incentives from foreign OEMs and the weak rouble
have also been key factors in the positive sales growth recorded in
October and November. he low base level that has been a feature of
the Russian market of the past few years has ensured that it is on
target for a lower overall y/y decline than other major global
markets in 2020 as a result of the COVID-19 virus pandemic. But
this will be small comfort to the OEMs that are struggling to
generate profitable sales in a market that is still an extremely
tough environment for carmakers. It speaks volumes that one of the
main catalysts for private buyers making car purchases at the
moment is the weak state of the Russian currency, which has not
been helped by the significant plunges in oil prices this year as a
result of the pandemic. The collapse in hydrocarbon exports, the
23% reduction in crude oil production agreed with OPEC, and a deep
fall in domestic demand will lead to a significant fall in the
overall economic activity. After a 1.3% y/y gain in 2019, it will
shrink by 4.3% y/y in 2020, rebounding by 1.9% y/y in 2021. Russian
authorities have pledged over USD40 billion for financial rescue
measures to help to support businesses and households. However, at
only 2.8% of GDP, the bailout is insufficient to protect especially
small and medium-sized businesses. (IHS Markit AutoIntelligence's
Tim Urquhart)
Conforming to IHS Markit's expectations, Kazakhstan's export
performance remained weak in the third quarter, as it was hit by
low oil prices, oil production cuts, and overall tepid external
demand amid the resurgence of the COVID-19-virus pandemic. The
recent weakness of the tenge exchange rate and muted domestic
demand should strengthen the trade balance in the short term, and
consistent quarterly trade surpluses are expected to return, with
external demand gradually recovering in 2021. (IHS Markit Economist
Venla Sipilä)
According to the latest customs-based trade results published
by the State Statistics Committee, exports from Kazakhstan fell by
an accelerated rate of 34% year on year (y/y) in the third quarter,
which is more than a 17% y/y decrease for January-September.
Meanwhile, imports returned to growth, expanding by 3.7% y/y, thus
leaving the January-September cumulative contraction at a modest
0.5% y/y.
The trade balance showed a deficit in June, the first negative
goods trade balance for Kazakhstan since November 2010, and
shortfalls persisted until the end of the third quarter. As a
result, the trade gap for July-September totalled USD1.7 billion,
unlike the USD3.6-billion surplus Kazakhstan registered for the
same period last year. In cumulative terms, however, the trade
surplus held, even if the total of USD7.8 billion for
January-September marks a narrowing above 50% y/y.
Kazakhstan's exports to other Commonwealth of Independent
States (CIS) countries were relatively weak during the second
quarter; however, non-CIS exports in the third quarter contracted
faster than the y/y average. Meanwhile, rising non-CIS imports
account for the overall recovery of imports.
After taking over as the leading export market in the second
quarter, China further increased its share to nearly 20% in
January-September, whereas Italy's share continued to fall, now
reaching 14.3%. Russia and the Netherlands followed with exports
shares of 9.6% and 6.5%, respectively.
The share of mineral sector products of total exports continued
to fall in the third quarter, and the 68.2% share for
January-September compares with 72.5% in the first half.
Concurrently, the share of metals and metal products rose further
to 15.7% in the same period following 14% in the first half.
Russia retained its uncontested position as the leading imports
supplier, with a share of nearly 34%. Machinery and equipment, and
transport equipment accounted for an increased share of nearly 46%
of goods imports.
Kazakhstan's weak trade performance, as shown in the latest
data, does not come as a surprise, given declining oil prices. The
Brent oil price in the third quarter averaged USD42.82 per barrel,
compared with USD61.84 in the third quarter of 2019.
In addition, Kazakhstan restricted its oil output to comply
with its OPEC+ commitments, after having failed to fully do so
earlier this year. Moreover, external demand from key European
markets such as Italy and the Netherlands remains muted.
Asia-Pacific
APAC equity markets closed mixed; South Korea -1.6%, Hong Kong
-0.8%, Japan -0.3%, Mainland China -0.2%, Australia +0.2%, and
India +0.4%.
Baidu has received a permit to deploy autonomous cars without
safety drivers in Beijing, China. The company has been granted the
permit by Beijing transportation authorities for five of its
vehicles to conduct fully driverless road tests. The vehicles are
being tested for Baidu's commercial robotaxi service, "Apollo Go",
reports Pandaily. Beijing has safety requirements for companies
seeking driverless testing permission, which includes obtaining T3
or higher testing ability, completing more than 300,000 km of safe
test driving on open roads and passing an evaluation on a closed
track. Baidu said it has cleared each of these requirements and has
also developed its 5G "Remote Driving Service", which
instantaneously provides immediate assistance from a remote human
operator, to enhance safety. This permit will support Baidu in
gradually reducing human involvement on test vehicles and
eventually remove in-car safety drivers from its autonomous vehicle
road tests. Recently, Baidu demonstrated its Apollo robotaxis
operating without human safety drivers at Beijing's Shougang Park
during its annual Baidu World 2020 conference. (IHS Markit
Automotive Mobility's Surabhi Rajpal)
Sinopec's board has approved plans to build a 1.2-million
metric tons/year (MMt/y) ethylene plant and downstream units in the
Nangang area of the port of Tianjin, China, according to an
announcement posted on 4 December. Sinopec estimates the cost of
the project at 28.8 billion renminbi ($4.4 billion). Sinopec
announced in November that it had signed a framework agreement with
the Tianjin authorities to invest about 70 billion renminbi at
Nangang in 2021-25 to build capacity for petrochemicals and other
products. Sinopec operates a 1-MMt/y ethylene plant and downstream
complex in the Dagang district of Tianjin in a 50/50 joint venture
(JV) with Sabic called Sinopec Sabic Tianjin Petrochemical. The JV
announced in 2019 that it would invest 1.5 billion renminbi to
expand ethylene capacity by 300,000 metric tons/year for completion
in 2021. Sinopec also has a wholly-owned 240,000-metric tons/year
ethylene plant at Dagang, operated by its Sinopec Tianjin Co.
subsidiary. Nangang and Dagang are both in Tianjin's Binhai New
Area development zone. China's ethylene self-sufficiency is low at
about 61%, according to IHS Markit's World Analysis 2021: Ethylene,
but an aggressive construction program is expected to improve that
to just over 70% by 2025. (IHS Markit Chemical Advisory)
Toyota has announced that it is preparing to preview a new
mid-size battery-electric sport utility vehicle (SUV). According to
a statement, this will be based on the upcoming e-TNGA architecture
and will form part of its "European Battery Electric line-up". The
automaker has also released a line-up sketch of the side view,
which shows a vehicle with SUV design traits with such as large
wheels and high window line and bonnet, but with relatively rakish
windscreen and rear window. The company added that manufacturing
will take place at Toyota's ZEV Factory in Japan. Toyota announced
last year that it was launching what it refers to as the e-TNGA
platform for future battery electric vehicle (BEV) models. This yet
to be named vehicle is referred to as 'C-SUV EV' in IHS Markit
forecasts, underpinned by the 'GA-E' architecture. Production will
take place at the automaker's Motomachi (Japan) facility initially
from 2022, although we also expect production later on at two sites
in China and one in Thailand. IHS Markit forecasts that sales in
West and Central Europe will begin in 2022, and in its first full
year of 2023, it will sell around 7,500 units. (IHS Markit
AutoIntelligence's Ian Fletcher)
Toyota and Hino, together with three convenience store
companies, 7-Eleven, FamilyMart, and Lawson, have announced a joint
project to introduce light-duty fuel-cell electric trucks,
according to a statement from Toyota. Under the plans, the three
convenience store companies will trial the light-duty fuel-cell
electric trucks with a maximum payload of 3 tons, jointly developed
by Toyota and Hino, next year to study their rollout plan. The
companies will test the vehicles in logistics between multiple
distribution centers and stores. Following this, in 2022 and
beyond, the companies will collaborate to finalize the positioning
of hydrogen stations, hydrogen supply, filling capability, and
operating hours, as well as the purchase of vehicles and the cost
of hydrogen fuel. The cruising range for the trucks developed by
Toyota and Hino will be set at approximately 400 km. Toyota and
Hino have positioned hydrogen as an important energy source for the
future and have worked together on developing technologies and
innovating fuel-cell vehicles for over 15 years since their joint
demonstration trials of a fuel-cell bus in 2003. Toyota has been
working on the development of fuel-cell electric trucks for several
years, which includes carrying out tests using a truck from the
PACCAR Kenworth brand as a base vehicle. The latest collaboration
between the five companies is directed towards the future
widespread introduction of fuel-cell electric trucks as well as
reduced CO2 emissions. Earlier this year, Hino and Toyota agreed to
jointly develop a heavy-duty fuel-cell electric trucks. The joint
development initiative is part of CO2 emission reduction goals set
by both automakers through to 2050. (IHS Markit AutoIntelligence's
Isha Sharma)
Lexus has shared a video detailing the new DIRECT4 electric
all-wheel drivetrain technology, which will make its way in its
future battery electric and hybrid electric models. The new DIRECT4
system is designed to deliver precise control using electric motors
and braking force to direct torque between the axles and between
the wheels. "By automatically adjusting the balance of front and
rear-wheel drive, the system adapts the driving conditions to the
driver's intentions, changing the driving feel and giving the car
the best driving posture. The system uses a front and rear e-axle,
each featuring a high-torque electric motor and transaxle, focusing
on optimum drive force distribution. As the motor is directly
connected to the wheels by a single driveshaft, it operates without
delay," the automaker stated in its release. The video also
included a teaser of Lexus' future design, revealing sketches and
images of a new concept car to be revealed in the first quarter of
2021. The new DIRECT4 is part of the Lexus new strategy, called
'Lexus Electrified', signifying a leap in advanced electric
technologies. (IHS Markit AutoIntelligence's Isha Sharma)
Posted 08 December 2020 by Chris Fenske, Head of Fixed Income Research, Americas, S&P Global Market Intelligence
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